Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
Midwest vs. Northeast? EPA's NOx Policy
$1B, Detroit Edison predicts power shortages during remediation.
AEP says costs would top $1B, Detroit Edison predicts power shortages during remediation.
American Electric Power. All of AEP's service territory - Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia - is affected by the EPA's ruling. AEP, which operates 19 coal plants, is "extremely disappointed with EPA's decision to ignore the sound alternatives proposed by 13 states and a coalition of electric utilities and other stakeholders," according to Dale Heydlauff. Heydlauff is AEP's vice president of environmental affairs.
The utility says it will use selective catalytic reduction, or SCR, technologies to achieve emissions goals for its facilities. Spokeswoman Deb Strohmaier says that to meet the EPA's goal of 85 percent reduction, AEP would need to put SCR technologies on 75 percent of its coal-fired units. That would mean a capital cost of $1.3 billion to $1.6 billion. Customers, therefore, wouldn't save as much as they expected from a restructured electricity industry, Strohmaier added. It's likely that litigation will follow this issue, she predicted.
Virginia Power. The utility agrees with the government that NOx emissions must be reduced, but the company would have preferred to do it in stages, spokesman Dan Genest says. Utility officials preferred Gov. James Gilmore's proposal, which suggested that utilities be responsible for 65 percent of the state's reduction target. Subsequent modeling would have recommended further emission reductions, if needed. Under the EPA's plan, utilities in Virginia will be responsible for 85 percent of the needed reductions. Genest echoes AEP's disappointment that even though the EPA asked to see alternate emission reduction plans, the plans submitted by governors from 13 of the affected states weren't really given serious consideration.
Virginia Power expects to use low-NOx burners as well as SCR technologies on some plants to meet its state's reduction goal.
The World Energy Congress, which met in Houston in September, recommends that nuclear power "should play a major role in contributing to electricity provision and in strategies to combat global warming." So does Virginia Power have any plans to increase its reliance on nuclear power? "Everyone here wishes we could," Genest says. "But the political and economic atmosphere isn't right for building nuclear plants." Nuclear accounts for 34 percent of the fuel mix, while coal is 40 percent.
Pepco. Potomac Electric Power Co. officials say the ruling has no effect in the District of Columbia because there are no affected plants in D.C. The 3 percent increase in allowable emissions (see table, Affected Jurisdictions) can be attributed to a natural, expected increase in generation during that time period. Four of the utility's six generating plants, however, are located outside the District, in Maryland and Virginia, and emissions from those plants, which burn coal primarily, are listed in the table under those respective states.
Detroit Edison. The company's environmental management and resources director, Skiles Boyd, predicts that the Midwest will have power shortages and perhaps outages while affected utilities install SCR units. Installation of SCRs at one unit would result in an outage of nearly five months, Boyd says.