The Cost of Compliance: Federal EPA mandates set to impact the Commonwealth
Wednesday, May 25, 2011
In response to a litany of new and pending federal Environmental Protection Agency regulations, LG&E and KU will on June 1 file with the Kentucky Public Service Commission our detailed plan to achieve compliance with these stricter mandates, in the most cost-effective manner, with the least amount of impact on our customers and the Commonwealth.
Specifically, our filing amounts to an estimated $2.5 billion in environmental upgrades for our Mill Creek, Trimble County, Ghent and Brown generating stations. These upgrades are necessary for us to comply with new and pending Federal EPA air regulations such as the National Ambient Air Quality Standards, Clean Air Transport Rule and Maximum Achievable Control Technology for Hazardous Air Pollutants. Compliance with these federal EPA mandates mean that LG&E residential customers will see monthly bill impacts growing to an additional $16.33 increase by 2016. For KU customers, the bill impact is estimated to grow to be $9.46 per month by 2016.
It’s important to note that these estimates are just for air regulations. Further, federal EPA mandates for land and water could require additional environmental upgrades and add costs to the energy used by our customers.
And, since many electric utilities across the nation will be competing for the same resources and materials under the same compressed timeframe, cost escalations are particularly concerning for us.
While in some instances it is more cost-effective to install controls at existing units, in other cases it might be more economical to retire units and replace the lost energy supplied by them.
We expect to determine by July if it will be more cost-effective to retire our Cane Run, Green River and Tyrone generating stations rather than retrofit them.
Of course, replacing any lost energy while continuing to safely and reliably meet the annual 1.5 percent electric demand growth of our customers will result in even more and requests for regulatory approvals expenses for customers.
We have expressed – early and often – our concerns to our policy-makers and communicated the significant impacts of these new and pending regulations to all our stakeholders. We will continue to do so in our efforts to minimize the impacts on you.
With looming federal EPA deadlines before us, we must move forward with the most cost-effective compliance strategy and prepare for the future.
We take our responsibility to the environment seriously, as we’ve always done. But the federal EPA’s mandates come at a significant cost for Kentucky.
We want you to be as prepared as possible, too, which is why we will continue to update you on what is required of us, and how we’re acting to prudently prepare and minimize the consequences on our customers.
By Chip Keeling
Specifically, our filing amounts to an estimated $2.5 billion in environmental upgrades for our Mill Creek, Trimble County, Ghent and Brown generating stations. These upgrades are necessary for us to comply with new and pending Federal EPA air regulations such as the National Ambient Air Quality Standards, Clean Air Transport Rule and Maximum Achievable Control Technology for Hazardous Air Pollutants. Compliance with these federal EPA mandates mean that LG&E residential customers will see monthly bill impacts growing to an additional $16.33 increase by 2016. For KU customers, the bill impact is estimated to grow to be $9.46 per month by 2016.
It’s important to note that these estimates are just for air regulations. Further, federal EPA mandates for land and water could require additional environmental upgrades and add costs to the energy used by our customers.
And, since many electric utilities across the nation will be competing for the same resources and materials under the same compressed timeframe, cost escalations are particularly concerning for us.
While in some instances it is more cost-effective to install controls at existing units, in other cases it might be more economical to retire units and replace the lost energy supplied by them.
We expect to determine by July if it will be more cost-effective to retire our Cane Run, Green River and Tyrone generating stations rather than retrofit them.
Of course, replacing any lost energy while continuing to safely and reliably meet the annual 1.5 percent electric demand growth of our customers will result in even more and requests for regulatory approvals expenses for customers.
We have expressed – early and often – our concerns to our policy-makers and communicated the significant impacts of these new and pending regulations to all our stakeholders. We will continue to do so in our efforts to minimize the impacts on you.
With looming federal EPA deadlines before us, we must move forward with the most cost-effective compliance strategy and prepare for the future.
We take our responsibility to the environment seriously, as we’ve always done. But the federal EPA’s mandates come at a significant cost for Kentucky.
We want you to be as prepared as possible, too, which is why we will continue to update you on what is required of us, and how we’re acting to prudently prepare and minimize the consequences on our customers.
By Chip Keeling
