Final rule on coal ash less onerous than earlier EPA version, firm concludes

The Environmental Protection Agency (EPA) coal ash rule issued Dec. 19 should be much easier for power plants to comply with than a draft version that EPA published in 2010, Bernstein Research said Dec. 22.

“In summary, while imposing certain incremental capital and operating costs on active coal ash ponds, and requiring the closure of coal ash ponds that have been inactive for two or more years, we expect the Coal Ash Rule to materially reduce the overall cost of compliance to electric utilities relative to the EPA’s proposed regulation of coal combustion residuals issued in May 2010,” Bernstein concluded.

The Bernstein Research commentary was authored chiefly by Senior Analyst Hugh Wynne.

On Dec. 19, the EPA issued its final rule to regulate the disposal of coal combustion residuals under the Resource Conservation and Recovery Act (RCRA). EPA will not regulate it as a hazardous waste and will seek to preserve coal ash recycling.

EPA’s final rule differs in material respects from the EPA’s proposed rule of May 2010. These differences are expected materially to reduce the cost of compliance to coal fired power plants.

The most important difference between the two is the elimination of the requirement that existing surface impoundments for the storage of coal ash, or coal ash ponds, be lined to prevent groundwater contamination, Bernstein said.

The May 2010 proposal would have required unlined coal ash ponds to be excavated and lined with a composite liner or be closed.

The final coal ash rule will permit the owners of unlined coal ash ponds to continue to operate them, provided the ponds do not contaminate groundwater, meet certain criteria with respect to location, and can demonstrate structural integrity. These changes to the rule will allow owners of power plants with compliant ash ponds to avoid the costs of closure, the cost of constructing dry ash landfills to receive future coal combustion residuals, and the cost of building a waste water treatment plant, Bernstein Research said.

The coal ash rule does impose certain location restrictions on all coal ash ponds. These criteria include restrictions relating to the placement of coal combustion residuals within a certain distance of the uppermost aquifer, in wetlands, within fault areas, in seismic impact zones and in unstable areas.

The coal ash rule also imposes safety requirements on all coal ash ponds. “Most importantly, the Coal Ash Rule requires periodic structural stability assessments by a qualified professional engineer, and periodic safety factor assessments to document whether the impoundment achieves minimum engineering factors of safety,” according to Bernstein.

Third, the rule requires the owners of coal ash ponds to install a system of monitoring wells to collect groundwater in the area of the ponds, to sample these wells, and to analyze the data to detect the presence of hazardous materials.

“Finally, we should note that the Coal Ash Rule will likely impose certain capital costs on coal ash ponds and landfills, as well as increase the operating cost of these units, although these costs are likely to be modest,” Bernstein Research said.

Bernstein Research is affiliated with Sanford C. Bernstein, which is a major Wall Street sell-side research and brokerage firm, with a global equity trading platform that spans the U.S., Europe, and Asia.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.