Surface Water and Groundwater
The production of electricity can affect the quality of surface water and groundwater through precipitation runoff, infiltration and collection of wastewater for treatment. States protect surface waters through a National Pollutant Discharge Elimination System (NPDES) permit process and state regulation of surface impoundments, and landfills promote protection of surface and groundwater resources. The federal Clean Water Act and the Safe Drinking Water Act also protect groundwater and surface water by setting standards on discharges.

We have invested heavily in water treatment systems to ensure we comply with our NPDES permits and we have an extensive groundwater monitoring program to help us detect adverse impacts to water quality. Our design and construction practices for new landfills typically include composite liners, leachate collection systems and groundwater monitoring wells. We are proactively adding an additional synthetic liner to the landfill that will eventually serve the John W. Turk, Jr., ultra-supercritical coal plant in southwest Arkansas. This will bring the design up to the level included in the EPA’s proposed coal combustion residuals rule.

We have also learned that upgrading environmental controls to reduce impacts from our operations can impact other aspects of our operations in unexpected ways. As we brought new scrubbers on line to reduce air emissions during the past few years, for example, the water quality of the process wastewater was altered. We use the mineral trona to control sulfur trioxide (SO3) levels in the flue gas on some units. This resulted in changes to the pH of the fly ash pond, and heavy metals concentrations, such as selenium, increased beyond permit limits. We formed a team to help us overcome these challenges. The team was able to show that by managing the amount of trona used and by using pond aerators, we could keep the levels of selenium to within permit allowances and still comply with air emissions limits. The work of this team earned an Electric Power Research Institute Technology Transfer Award, recognizing the importance of this to the industry.

AEP River Operations operates a fleet of 72 towboats and 3,253 barges on the inland waterways in the United States. Both our towboats and barges are subject to many environmental regulations such as NPDES permits. The U.S. Coast Guard is tightening rules and looking to inspect towing vessels in the future. In 2010, we participated in a voluntary program called the Towing Vessel, Bridging and Implementation Team. As of the end of 2010, 66 vessels had completed the program, which registers our vessels as being in compliance. 

Wastewater
The existing federal guidelines for wastewater discharges have not been updated since the 1980s. The EPA conducted a major survey of power plants last year, including AEP’s, to determine if new technology standards for wastewater discharge systems are needed. The EPA has announced a schedule for issuing proposed guidelines in 2012 and final guidelines in 2014, which may require AEP to install additional treatment systems at our plants. It will be some time before we know what the EPA will propose, but we are concerned that the cost of meeting new technology guidelines could be significant.

Selenium is often found in several post-combustion waste streams. At our Mountaineer Plant in West Virginia we are working with several companies to build a selenium reduction system to meet the plant’s permit requirements. It is the first one on our system and only the fifth utility application in the United States. The process produces a small amount of solid waste that will be processed through an existing chloride purge stream filter system and disposed of in the plant’s landfill. The landfill permit is being modified to handle the additional waste. Construction began in 2010 and is scheduled to be completed by the end of 2011, with a spring 2012 in-service date, in time to meet new NPDES permit limits.

Water availability and usage
An increasing population and its associated increased demand for water can create uncertainties and pressure on the power sector when it comes to the need for water. We recognize this could potentially be a future business risk because of the need for water to produce electricity and an expected increased competition for water in some areas in which we operate.

The 77 hydro electric power units we operate at 17 plants in five states, along six rivers, can be affected by local changes in precipitation patterns such as drought. But the bigger risk is the growth in development and recreation occurring on shorefronts downstream of these plants. We continue to update and rehearse our emergency action plans to be prepared for any catastrophic event that would put people and property at risk. We understand the recreational and lifestyle value of having access to the waterfront and we work with states to pass ordinances that provide the benefits of those values but also protect future development along shorefronts where there are hydro plants.

We received a 30-year license renewal for our Smith Mountain pumped storage project in Virginia and are anticipating a license renewal for the Claytor Lake hydroelectric project, also in Virginia. Although environmental monitoring and management requirements for both facilities have or are expected to increase, the effects on generation are negligible. During the relicensing process we conducted significant outreach to communities surrounding the plants to answer questions, listen to concerns and work collaboratively to address environmental, quality of life and other issues. We are preparing applications for license renewals for three of our hydroelectric facilities on the Kanawha River in West Virginia, which are due in 2012.