Georgia Power said it can’t meet a five-month deadline imposed by the U.S. Environmental Protection Agency to cap and regulate two major pollutants from its coal-fired power plants.
The default could mean customers end up paying more money.
The utility has been told to install pollution-control technology to reduce sulfur dioxides and nitrogen oxides to required levels by Jan. 1, but claims environmental upgrades such as these take four to five years to design and build, said Aaron Mitchell, Georgia Power’s Air Program team leader.
“We think that any new control that might be required would be difficult if not impossible within the time constraint,” Mitchell said.
The EPA disagrees, saying the utility can use previously installed pollution controls, change how electricity is distributed at their power plants or use more fuel that emits lower pollutants — such as natural gas and nuclear — to meet the mandated deadline.
“[Utilities] have known that these emission reduction requirements were coming for many years now, and many have already taken many or all of the steps needed to comply,” the EPA said in a statement.
Utilities that cannot meet these requirements will be forced to buy emission allowances, which vary in price depending upon the state. (For Georgia Power, the cost of emissions would start at $600 for every ton of sulfur dioxides and $500 for every ton of nitrogen oxides, with built-in increases for 2014.).
Georgia Power would recover the cost of the emission allowances through fuel charges. The company could not ask for those costs until the emissions are actually used, company spokeswoman Lynn Wallace said.
The new EPA edict requires reductions in region-wide sulfur dioxide emissions of 20 percent by 2012 and 50 percent by 2014, and to curb region-wide nitrogen oxide emissions by 12 percent in 2012 and 18 percent in 2014. Georgia is grouped with states that won’t have to observe the 2014 requirements, the EPA said.
The EPA’s newly released Cross State Air Pollution Rule regulates sulfur dioxides and nitrogen oxides that come from coal plants used to generate electricity in 27 states. These pollutants contribute to health problems such as asthma, bronchitis and other respiratory diseases.
Georgia Power receives 43 percent of its electricity from coal, but some of the company’s coal units were built in the 1960s, long before pollution controls were created.
The region has struggled with its air quality for decades. In 1986-88 measurements by the Georgia Environmental Protection Division, the region’s ozone level reached its worst on record — measured at 124 parts per billion. When the EPA set 84 parts per billion as the ozone standard in 1997, the region was still having trouble, registering 118 parts per billion in 1997-99 measurements. It just recently met the 1997 standard.
“Certainly the EPA knows it takes a while to design and build add-on, pollution-control equipment,” said Jac Capp, chief of the EPD’s Air Protection branch. “I think there might be a disagreement on how long, but certainly [the EPA] knows it takes years.”
The guidelines for sulfur dioxide and nitrogen oxide are stricter than the preceding Clean Air Interstate Rule, yet some analysts say Georgia Power and its parent company, Atlanta-based Southern Co., could avoid shutdowns with the new restrictions.
“We believe that Southern would benefit from the new rule with fewer expected coal-fired retirements,” Hugh Wynne, a senior analyst with Bernstein Research, wrote in a July 8 research note, referring to plant closures.
Wynne listed Southern among 13 regulated utilities that pose the highest risk of closing coal plants, but did not include the company among those facing the largest capital expenses to comply with the new rule. Southern’s other regulated utilities have coal-fired plants in Alabama, Florida and Mississippi.
Southern potentially could spend $241 million, or 1 percent of its basic utility rates, to close or upgrade plants across its four-state territory, Wynne said in his note.
Utilities can curb sulfur dioxides and nitrogen oxides with pollution controls known as scrubbers, equipment that puts a limestone slurry on flue gases, removing sulfur dioxides from them; and selective catalytic reduction, or SCR, systems. The price to install scrubbers at a plant can range from $300 million to more than $1 billion, Wallace said. The costs vary based on the type of scrubber and the size of each individual coal-producing unit, she said.
Georgia Power has scrubbers installed on all four coal-fired units at plants Bowen and Hammond, two at Plant Wansley and one of the four units at Scherer. Bowen and Wansley also have SCRs, as does one of the four units at Hammond. Scrubbers and SCRs are being built for the remaining units at Scherer.
The utility also has said it plans to close two of the four coal-fired units at Plant Branch. Plant McDonough’s two coal units are being converted to three natural gas units, the first of which will start producing power next year.
The installed scrubbers and SCRs are part of the EPD’s schedule to have Georgia’s utilities put pollution controls on their large coal units, Capp said. Installation must be done by 2015.
The new EPA rule is the first of two that will impact coal plants. Guidelines to regulate mercury are expected in November.
Utilities including Georgia Power have lined up in opposition, saying the proposed mercury rule would be too costly to comply.
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