The time frame for compliance is one concern; the other is the cost to customers and the economy. Until the rules are final, it is extremely difficult to estimate the total cost of compliance or the exact amount of coal-fired generation that will be retired. However, we know it will be significant. During the past decade, we invested more than $5 billion in pollution controls at many of our coal units, and we believe the cost to comply with the EPA’s proposed rules, if approved as is, could be more than double our costs to-date during the next decade. This is consistent with the Edison Electric Institute’s analysis that concluded the rules would force the shutdown of 20 percent to 30 percent of coal-fired capacity nationwide, and require about $200 billion in additional capital expense for the utility industry. This is about three times what the industry spent on environmental controls during the previous 20 years.

What concerns us most is the impact it would have on our customers and local economies. We could see rates increase significantly at a time when the economy is still fragile, particularly in the areas we serve where income is below the national median and customers already struggle to pay their electric bills. Such rate increases would have very detrimental impacts on jobs and the economy in general. The sluggish economy dampens the growth of electricity usage, a factor that exacerbates rate impacts from significant capital investment to our customers. Read more about this issue in Public Policy.

We are also concerned that the EPA’s plan is not sensitive to the limitations on access that utilities have to capital markets. At the end of the day, there are finite limits to the debt that AEP can accrue. We believe the EPA’s rules should consider these financial realities.

Between 2003 and 2011, we built nine scrubbers. During that time, the rate impacts to customers were somewhat offset by fuel cost reductions, reductions in the normal capital budget and very little construction of new power plants. That will not be the case going forward.

We don’t dispute that there would be short-term job creation during the construction phase. But those jobs would disappear when the construction is complete. Our analysis indicates that for every job gained at a combined-cycle natural gas plant, which is what we would eventually build, four or five jobs would be lost by a coal plant shutdown. That’s because gas plants require fewer people to operate. At the same time, manufacturers that rely heavily on electricity for their production processes could be forced to close or go abroad, eliminating jobs and tax revenues. We know this because we are hearing it from customers now.

Water intake screens like these at the Cardinal Plant in Brilliant, Ohio, are the target of the U.S. EPA’s proposed rule regarding cooling water intake structures at power plants.