Will this impact the Pu’unene Coal fired generator?

Details of new EPA regulations, released Thursday, mandate reductions in power-plant emissions. ‘Old, decrepit plants’ without pollution controls must shut down, which some analysts say just accelerates the inevitable switchover from coal to natural gas.

“New Jobs-Cleaner Air,” published by University of Massachusetts economists in February, found that EPA air pollution regulations would actually create up to 300,000 new US jobs in each of the next five years, as companies upgrade plants and equipment.

American Electric Power, one the nation’s largest utilities and one of the biggest complainants about the new rule, announced last month that these new air regulations would cause “premature” shutdown of a quarter of its coal-generating capacity, causing electric rate increases and the loss of hundreds of jobs.

“The cumulative impacts of the EPA’s current regulatory path have been vastly underestimated, particularly in Midwest states dependent on coal to fuel their economies,” said Michael G. Morris, chairman and chief executive officer of American Electric Power, in a statement last month. “The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling.”

But when speaking to investors on June 1, Mr. Morris seemed far more sanguine about the new air pollution rules and the resulting coal-fired plant closures, news reports indicate.

“On balance, we think that is the appropriate way to go,” Morris said of the closures, the National Journal reported. “Not only to treat our customers, but also to treat our shareholders, near and long term, with that small amount of the fleet going off-line.”
Plants that can’t be scrubbed get scrapped

Scores of aging plants, with little or no pollution abatement equipment, will be too costly to upgrade. Of the approximately 600 coal-fired power plants in the US, more than 86 could be forced into early retirement, according to the North American Electric Reliability Corporation, which oversees the power grid.

Yet some studies have shown that such closures will actually produce financial benefits to the utility industry.

Up to one-fifth of the nation’s coal-fired power plants – the oldest, smallest plants, with few emissions controls – could be closed as a result of the new cross-state rule and other expected air pollution mandates expected in the next few years, predicted “Growth From Subtraction: Impact of EPA Rules on Power Markets,” a Credit Suisse study issued last fall.

Still, the Credit Suisse study foresees a positive long-term outcome for investors, as big utility companies shed these old, inefficient plants. EPA rules, it said, “simply accelerate an inevitable market tightening by 4-5 years,” as coal – for decades the low-cost fuel for energy production – cedes to natural gas.

For state air quality regulators on the front lines, the new rule can’t come soon enough. They expect to see reductions in the costs many states currently must shoulder from pollution that blows in from power plants upwind.

“This is the biggest thing we’ve seen in decades,” says John Paul, administrator of the Regional Air Pollution Control Agency in Dayton, Ohio, a state regulator. “You’ll definitely see a difference in reactions depending on the utility. Some aren’t complaining at all. Those with well-controlled, fairly modern units don’t see this rule as a big burden. But utilities with coal-fired units 40-60 years old now know the end for those is near – and they’re hollering.”

But his sympathy, he says, has its limits.

“Those old, decrepit plants were paid for decades ago and have made a lot of money for these companies – and they should have been replaced long ago,” he says. “For 20 years we’ve been anticipating this – and I, for one, think it’s about time.”