Paul Evanson, President and CEO. SSEB 50 th Annual Meeting

Transcription

1 Paul Evanson, President and CEO Allegheny Energy SSEB 50 th Annual Meeting

2 AYE Service Area and Generation Plants -2-

3 Service Area and Generation Plants NY Allegheny Service Territory MI FirstEnergy Service Territory Allegheny Plants PA FirstEnergy Plants IN OH NJ KY WV VA -3-

4 U.S. Economic and Electricity Demand Growth GDP in Trillion Dollars Electricity Demand in Billion Kilowatt-hours Data source: World Bank, World Development Indicators, U.S. Energy Information Agency -4-

5 U.S. Electricity Demand Projected to Grow 30% Increase Source: Energy Information Administration, Annual Energy Outlook

6 Coal Provides Almost 50% of U.S. Electricity Source: U.S. Department of Energy, Energy Information Administration, Power Plant Operations Report (EIA- 923); 2009 preliminary data. -6-

7 Congressional Attempts to Stifle Coal Generation Several cap-and-trade bills introduced which, if enacted, will add energy costs to Americans. example: Waxman-Markey would cost taxpayers approximately a $393 billion per year. Other coal related bills introduced which, if enacted, will be detrimental to coal generation. Federal legislation will most likely not pass this year. Regardless, the industry will have a challenge meeting federal regulations. -7-

8 Pending EPA Regulations The maze of regulations over the next five years Ozone SO2/NO2 CAIR Water Revised Ozone NAAQS Beginning CAIR Phase I Seasonal NOx Cap CAIR Vacated CAIR Remanded Reconsidered Ozone NAAQS NO2 Primary NAAQS SO2 Primary NAAQS Proposed CAIR Replacement Final CAIR Rule Expected Replacement Rule Expected CO2 Regulation Effluent Guidelines proposed rule expected SO2/NO2 Secondary NAAQS 316(b) final rule expected Effluent Guidelines Final rule expected Next Ozone NAAQS Revision 316(b) Compliance 3-4 yrs after final rule Effluent Guidelines Compliance 3-5 yrs after final rule '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 PM-2.5 SIPs due ( 97) CAMR & Delisting Rule vacated Begin CAIR Phase I Annual NOx Cap Begin CAIR Phase I Annual SO2 Cap Proposed Rule for CCBs Management PM2.5 Next PM- Final 2.5 Rule for NAAQS CCBs Revision Mgmt HAPs MACT proposed rule 316(b) proposed rule expected PM-2.5 SIPs due ( 06) HAPS MACT final rule expected Final EPA Nonattainment Designations Ash New PM-2.5 NAAQS Designations Begin Compliance Requirements under Final CCB Rule (ground water monitoring, double monitors, closure, dry ash conversion) Compliance with CAIR Replacement Rule Hg/HAPS Beginning CAIR Phase II Annual SO2 & NOx Caps HAPS MACT Compliance 3 yrs after final rule CO2 Beginning CAIR Phase II Seasonal NOx Cap will force nearly all coal plants to retrofit or retire. -8-

9 Regulations Will Require Significant Retrofits 40% of US coal capacity is scrubbed. 33% of US coal capacity has an SCR. Therefore, to survive the train wreck, about 2/3 of US coal capacity would have to invest in either a scrubber and/or an SCR, plus other controls. AE has already invested ~$3 Billion in clean air controls. -9-

10 Regulations Could Negatively Impact Reliability and Consumer Rates 67 GW of U.S. coal capacity could potentially close 4GW 10 GW ~ 7GW 4 GW 15 GW 21 GW 1 GW...27 GW of which is in SSEB states. Source: EnergyVelocity database. U.S. coal units without either NOx or SO2 controls and heat rates greater than 10,500 mmbtu/mwh. -10-

11 Regulations Will Be Costly Utilities/Generators in SSEB states may need $50 to $100 billion to retrofit or replace coal generation and these costs will be borne by utility customers. Source: Air costs per EEI Coal Fleet Initiative study. Water & solids cost per AYE internal estimates. Carbon costs per EIA AEO

12 Regulations Effect on Jobs and State Economies 67,000 Jobs at Risk $5.4 Billion Wages & Taxes at Risk -12-

13 Regulations Will Affect SSEB States 28,000 Jobs at Risk $2.3 Billion Wages & Taxes at Risk -13-

14 What Must Be Done We must work with Congress and the EPA to mitigate the Train Wreck by coming up with regulations that: Provide a better time line for implementation of regulations; Balance reducing emissions with keeping the lights on limit cost impact on customers; and That support the long-term development of clean coal technologies. If we do not find solutions, then we face: A rash of generation retirements; Loss of jobs in the utility/generation sectors; and Increased costs for utilities and their customers. -14-