An Environmental Protection Agency (EPA) rule targeting waterway pollution from power plants would phase out wet disposal methods and require coal plants to convert to dry ash handling systems, according to an overview from A.B. Bernstein.
The final Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Industry were issued Sept. 30. The rule sets federal limits on the levels of toxic metals in wastewater streams from coal-fired boilers and associated emissions control equipment, the Bernstein firm said in a report to clients.
The EPA said that the new standards will be phased in between 2018 and 2023 in order to allow power plants to coordinate compliance with EPA’s new coal ash rule. Power plant compliance dates depends on the renewal schedule of their respective Clean Water Act permits, EPA has said.
Coal-fired power plants remove and dispose of solid wastes from their boilers and flue gas desulfurization units (SO2 scrubbers) systems through both wet and dry disposal methods. Dry disposal methods include hauling the waste to an off-site landfill or selling it for use in the production of cement and concrete, or in the construction of embankments and road bases.
In wet ash handling systems, coal ash and scrubber residues are sluiced from the boiler and FGD system and transported in a slurry to surface impoundment settling ponds generally maintained on-site.
The final effluent guidelines would phase out wet disposal methods and require coal plants to convert to dry ash handling systems. In addition, the disposal of wastewater from scrubbers would require the construction of wastewater treatment plants, according to the reported authored chiefly by Bernstein Senior Analyst Hugh Wynne.
“The cost of complying with the EPA’s effluent guidelines could be quite high for utilities that rely heavily, on coal fired generation,” Bernstein said.
Competitive generators such as Dynegy (NYSE:DYN) and NRG Energy (NYSE:NRG), which lack the ability to recoup regulatory compliance costs through a rate base, could be especially hard hit, Bernstein suggested.
“For regulated utilities, by contrast, we would expect the capital invested to comply with EPA’s new water effluent guidelines to be incorporated into regulated rate base, not only allowing its recovery but potentially accelerating growth in rate base and thus in regulated earnings,” Bernstein said.
Bernstein is an affiliate of Bernstein Research and Sanford C. Bernstein. The organization is a New York-based investment research and financial management firm.