MidAmerican Energy should be able to comply with the U.S. Environmental Protection Agency’s new Mercury and Air Toxics (MATS) rule with emissions control projects it already has in the works, though some unit shutdowns may be possible, said MidAmerican in its Feb. 27 annual Form 10-K filing.
The final MATS ruled was released by the EPA in December 2011 and published in the Federal Register on Feb. 16. It requires that new and existing coal-fueled facilities achieve emission standards for mercury, acid gases and other non-mercury hazardous air pollutants. Existing sources are required to comply with the new standards within three years after the rule is final, with individual sources granted an additional year to complete installation of controls if approved by the permitting authority.
“While the final MATS continues to be reviewed by MidAmerican Energy, MidAmerican Energy believes that its emissions reduction projects completed to date or currently permitted or planned for installation, including scrubbers, baghouses and electrostatic precipitators are consistent with the EPA’s MATS and will support MidAmerican Energy’s ability to comply with the final rule’s standards for acid gases and non-mercury metallic hazardous air pollutants,” the Form 10-K noted. “MidAmerican Energy will be required to take additional actions to reduce mercury emissions through the installation of controls or use of sorbent injection at certain of its coal-fueled generating facilities and otherwise comply with the final rule’s standards. MidAmerican Energy is evaluating whether or not to close certain units.”
Another EPA program is the Cross-State Air Pollution Rule (CSAPR), which was issued in 2011 but has been stayed by a federal appeals court while oral arguments are made in multiple appeals of that rule. The appeals court left EPA’s Clean Air Interstate Rule (CAIR) in force while those arguments on CSAPR are heard.
CSAPR addressed interstate transport of SO2 and NOx emissions in 27 eastern and Midwestern states. Upon full implementation in 2014, the CSAPR will reduce total SO2 emissions by 73% and NOx emissions by 54% at electric generating facilities in the 27-state region as compared to 2005 levels.
“MidAmerican Energy’s coal-fueled generating facilities in Iowa are impacted by and required to make emissions reductions and otherwise comply with the CSAPR,” said the Form 10-K. “In addition to issuing the final rule, the EPA issued a supplemental notice of proposed rulemaking to include Iowa and five other states in the ozone season nitrogen oxides emissions reduction requirements. The ozone season supplemental proposal was finalized in December 2011, and includes Iowa and four other states in the CSAPR ozone season nitrogen oxide emission reduction requirements. While MidAmerican Energy operates natural gas-fueled generating facilities in Iowa, which are in the CSAPR region, no significant impact is expected on those generating facilities.”
MidAmerican Energy said it is currently complying with the CAIR and has installed or is in the process of installing emissions controls at some of its generating facilities to comply with the CAIR and may purchase NOx and SO2 emissions credits for emissions in excess of allocated allowances. The cost of these credits is subject to market conditions at the time of purchase and historically has not been material.
All of the coal-fired plants operated by MidAmerican Energy are fueled by low-sulfur coal from the Powder River Basin in Wyoming. MidAmerican Energy’s coal supply portfolio includes multiple suppliers and mines under short-term and multi-year agreements of varying terms and quantities. MidAmerican Energy’s coal supply portfolio has all of its expected 2012 requirements under fixed-price contracts.
MidAmerican Energy reported that it has a long-haul coal transportation agreement with Union Pacific Railroad that expires in 2012. Under this agreement, Union Pacific delivers coal directly to MidAmerican Energy’s George Neal and Walter Scott Jr. plants and to an interchange point with Canadian Pacific Railway for short-haul delivery to the Louisa and Riverside plants. MidAmerican Energy has the ability to use BNSF Railway, an affiliate company, for delivery of coal to the Walter Scott Jr., Louisa and Riverside plants should the need arise.
MidAmerican Energy is a public utility company headquartered in Iowa that serves 0.7 million regulated retail electric customers in portions of Iowa, Illinois and South Dakota and 0.7 million regulated retail and transportation natural gas customers in portions of Iowa, South Dakota, Illinois and Nebraska. It is an indirect subsidiary of Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A and BRK.B). In 2011, 64% of its total energy came from coal-fired plants, down from 66% in 2010.