Southern exec fears high price tag from EPA compliance

Electric rate payers in certain areas could see a 10% to 20% cost increase due to compliance with U.S. Environmental Protection Agency standards such as the Mercury and Air Toxics Standards (MATS), Southern (NYSE: SO) Vice President Jeff Burleson told a regulatory conference Nov. 13 in Baltimore.

Burleson made his comments during a National Association of Regulatory Utility Commissioners (NARUC) conference. Southern has already spent billions on environmental investments. Full installation of baghouses could take a number of years, Burleson said during a panel discussion on EPA compliance.

EPA Assistant Administrator for Air and Radiation Gina McCarthy maintained that MATS does not threaten reliability but acknowledged 600 power plants were affected. She said three years would be sufficient to upgrade. McCarhty noted that plants that will retire instead of install the required upgrades were 16 years older than the average coal plant and were generating only one-third of the time.

Newly re-elected Georgia Public Service Commission member Stan Wise charged EPA needs to understand the impact on rates and reliability. Wise said 4,000 MW is at risk in Georgia and was concerned about rate shock from EPA impacts. He wondered if Southern’s $13bn -to-$18bn in EPA compliance costs (on upgrading coal plants to meet EPA regulations) could better be spent on new nuclear plants.

Babcock Power‘s Jim Dougherty praised the Kentucky Public Service Commission’s model as being an early adopter of a predictable project schedule. Babcock is a vendor of environmental equipment and services.

Noting the interaction of state and federal air and water policies, Commissioner Catherine Sandoval of the California Public Utilities Commission announced that California’s new greenhouse gas auction begins Nov. 14.

The California GHG policy gives parties allowances for 90% of the emissions they need with the rest to be acquired by auction. However, the Sacramento Municipal Utility District (SMUD) has announced it will not need to bid because it has enough hydro and renewables. The minimum bid is $10 per ton.