For more than 100 years, our customers have relied on us to deliver dependable, affordable electricity and our shareholders have relied on us to deliver a return on their investment. We must also comply with all applicable environmental laws and regulations, manage our impacts beyond compliance when appropriate, and work with our suppliers and stakeholders on a wide variety of other issues. We welcome and embrace these challenges because, in working to meet them, we become a stronger and more resilient company.

In recent years, our environmental efforts have become much more closely linked to our business performance and our relationships with a wide range of stakeholders. We have spent billions of dollars to comply with environmental regulations and face significant business risks if we fail.

Our company and our industry are on the cusp of a major transformation. It is being driven, in part, by new market fundamentals that will prompt a shift in resources, an aging infrastructure that is not cost-effective to operate, and changes in how customers use electricity. Another major factor driving this transformation is proposed changes to environmental regulations.

The U. S. Environmental Protection Agency (EPA) has announced new or revised regulations governing coal ash disposal, air emissions, cooling systems and wastewater effluent.

We are developing a transition plan that addresses all factors driving our transformation and all options are under consideration. It will take time but we are confident AEP will emerge from this transformation successfully. As we put our plan together, we are very concerned about the EPA’s proposed timing and lack of coordination for implementation and the consequences of disjointed approaches. We believe the implementation process must be thoughtful and take into account the impacts to the economy, reliability of the electric grid and costs to customers, as well as the environmental and public health benefits.

Support for the Clean Air Act

We support the Clean Air Act and we are not seeking to block implementation of further emission reductions. But that is not the perception of some of our stakeholders. We simply need more time to comply and it is up to us to do a better job communicating our true intent. 

We believe additional time to comply is justified because significant bodies of scientific work, including previous conclusions by the EPA, indicate that particulate emissions from power plants are not a significant risk to public health. We believe that particulates generated from the transportation sector are a greater risk to public health.

We recognize that environmental regulation is connected directly to our social and economic issues. Well-designed regulations with realistic compliance requirements and reasonable timelines for implementation can protect the delicate economic recovery of communities, preserve and create jobs, ensure grid reliability and keep electric rates reasonable for consumers and businesses. These are the issues we are trying to address with the EPA.

We have already made significant progress toward reducing emissions by installing state-of-the-art pollution controls during the past decade. We have built nine scrubbers on 7,900 megawatts (MW) of our coal-fired generating capacity between 2003 and 2011 and selective catalytic reduction systems (SCRs) on more than 11,000 MW since 2001. As a result, sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions have been reduced by about 80 percent from 1980 levels. In preparation for the addition of more controls on our plants, we have begun preliminary engineering and design work to build new scrubbers and other controls. In our experience it takes four to five years to engineer, fabricate and install a scrubber. Even this early preparation won’t get us to the EPA’s compliance deadlines on time, but we are confident that we can do it by 2020.

We also believe that it will not make economic sense to retrofit some of our older, less efficient coal units. These units may be candidates for re-powering with natural gas, or may be retired.

Our coal ash management practices also have evolved. We beneficially reuse or recycle approximately 40 percent of the coal combustion residuals (CCRs) generated at our plants. We enhanced our groundwater monitoring program by installing 84 additional monitoring wells since 2008 and expanded the inspection program at our coal ash disposal facilities to include audits of our inspection process in 2010 – an added layer of checks and balances.

We support a comprehensive review of all the regulations in concert to ensure coordination and feasibility of the regulations and timing for implementation.

AEP’s coal plants, including the Rockport Plant, Rockport, Ind., accounted for 80 percent of the energy we generated in 2010 and will continue to be an important part of our fuel mix for years to come.