Alabama Power staff said Tuesday regulations had helped make major cuts in two pollutants since 1996 and plans are to move ahead with closing ponds used to store ash residue from burning coal.
At the same time, the staffers told a Public Service Commission administrative law judge that they were working to implement technology to meet new mercury pollution standards, while studying new carbon emission restrictions.
“We’re continuing to review this very complicated and very lengthy set of regulations, including all the technical support provided by the EPA,” said Anthony Morino, who oversees air compliance and regulations for the utility. “It’s clear this regulation will cause significant changes to how utilities offer power to customers.”
Alabama Power staff estimated they would spend a total of $895 million between 2016 and 2020 on environmental compliance costs, with another $263 million for the closure of coal ash ponds. The utility says it has spent $3.6 billion to date on compliance.
But Alabama Power can afford it. The utility pulled in $5.9 billion in revenue in 2014 and reported net income after expenses and dividends of $761 million. State law guarantees Alabama Power a profit.
The utility also said costs in some cases were coming under earlier projections. Responding to a question from John Free, the director of the PSC’s electricity section, Wendy Hoomes, the assistant comptroller with Alabama Power, said projections for the cost of new bag houses — air pollution control devices — were five to 10 percent below initial projected costs.
The utility is currently moving to meet Mercury and Air Toxics Standards (MATS), aimed at reducing mercury and other toxic emissions from coal and oil-burning electric plants. Alabama Power is installing new technology to control those emissions and has closed some coal units or converted them to natural gas. Morino said the utility has moved from 23 coal-burning units at six plants to 10 units at four plants. Without compliance, Morino said, the utility could reach a nonattainment designation, “which can hinder economic development opportunities.”
Alabama Power said last year the MATS standards will cut sulfur dioxide pollution by up to 40 percent. Federal regulations and other controls have cut those emissions by 80 percent in Alabama since 1996. Scientific American reported earlier this year that the reductions had led to a significant increase in visibility in the state in the last 20 years.
But the utility still gets more than half its power from coal, a major source of carbon dioxide. New EPA rules require carbon emission cuts of 30 percent over 2005 levels by 2030. Morino said Alabama emitted 75.6 million tons of carbon dioxide in 2012, the baseline year for the standards. The state will have to bring that down to 56.9 million tons by 2030.
Alabama Power staff did not signal how the utility planned to address the carbon standards. Its two sister companies, Georgia Power and Mississippi Power, are less dependent on coal than Alabama Power is.
Alabama households pay some of the highest prices for electricity in the South. The average rate for residential customers in September was 11.82 cents per kilowatt hour; only South Carolina had a higher cost.
The utility and the PSC announced last week that it would refund customers overcollected fuel costs; the refund will amount to 1.3 cents a day for a typical household.
Alabama Power projected capital expenditures on environmental costs:
2016: $277 million
2017: $223 million
2018: $223 million
2019: $127 million
2020: $45 million
Projected costs for new coal ash requirements
2016: $8 million
2017: $8 million
2018: $48 million
2019: $73 million
2020: $126 million
Alabama Power revenues
2008: $6 billion
2009: $5.5 billion
2010: $5.9 billion
2011: $5.7 billion
2012: $5.5 billion
2013: $5.6 billion
2014: $5.9 billion
Alabama Power net income (after expenses & dividends)
2008: $616 million
2009: $670 million
2010: $707 million
2011: $708 million
2012: $704 million
2013: $712 million
2014: $761 million
Source: Alabama Power
This article was written by Brian Lyman from The Montgomery Advertiser and was legally licensed through the NewsCred publisher network.