June 15, 2011 

# AEP to Retire 6 GW of Coal Generation Amid EPA Regu lation Concerns POWERnews American Electric Power (AEP) plans to retire nearl y 6 GW of coal-fired capacity and upgrade or refuel another 11 GW as part of an estimated $8 billion plan to compl y with a series of regulations proposed by the U.S. Environmental Protection Agency (EPA). About 25 GW of AEP’s 38-GW capacity is coal-fired—ma king it the biggest coal-based utility in the natio n. The announced closures will affect five coal plants and several aging units at other plants that were buil t between 1944 and 1961. AEP also said it would upgrade or install new advanced emissions reduction equipment on anot her 10,100 MW; refuel 1,070 MW of coal generation as 93 2 MW of natural gas capacity; and build 1,220 MW ofnatural gas-fueled generation. The cost of the Ohio-based utility’s compliance pla n could range from $6 billion to $8 billion in capi tal investment through 2020, AEP said. “High demand for labor and materials due to a constrained compliance time fram e could drive actual costs higher than these estimates. The plan, including retirements, could change signific antly depending on the final form of the EPA regulations and regula tory approvals from state commissions.” AEP said it had already spent more than $7.2 billio n in retirements and retrofits to its coal-fired fl eet since 1990. “Annual emissions of nitrogen oxides from AEP plant s are 80 percent lower today than in 1990. Sulfur d ioxide emissions from AEP plants are 73 percent lower than in 1990.” Coal would fuel approximately 57% of AEP ’s total generating capacity by the end of the decade, accor ding to the plan. “The cumulative impacts of the EPA’s current regula tory path have been vastly underestimated, particul arly in Midwest states dependent on coal to fuel their econ omies,” said Michael G. Morris, AEP chairman and CE O. “We have worked for months to develop a compliance plan that will mitigate the impact of these rules for o ur customers and preserve jobs, but because of the unrealistic c ompliance timelines in the EPA proposals, we will h ave to prematurely shut down nearly 25 percent of our curr ent coal-fueled generating capacity, cut hundreds o f good power plant jobs, and invest billions of dollars in capit al to retire, retrofit and replace coal-fueled powe r plants.”
Morris added that the closures could result in a “s udden increase in electricity rates,” which would i mpact state economies “at a time when people and states are sti ll struggling.” The closures would also result in a loss of about 600 power plant jobs (with annual wages totaling ab out $40 million) as a result of compliance with the proposed federal rules. The potential impacts on the reliability of the tra nsmission system—particularly in the Midwest—were a lso significant, Morris said. “The proposed timelines for compliance aren’t adequate for construction of significant re trofits or replacement generation, so many coal-fueled plants would be prematurely retired or idled in just a few years. “With more time and flexibility, we will get to the same level of emission reductions, but it will cos t our customers less and will prevent premature job losses, extend the c onstruction job benefits, and ensure the ongoing re liability of the electric system,” he said. The five plants slated for closure by Dec. 31, 2014 , are: the 335-MW Glen Lyn Plant, Glen Lyn, Va.; th e 630-MW 

### Page 1 of 2 AEP to Retire 6 GW of Coal Generation Amid EPA Regulation Concerns

7/18/2011 http://www.powermag.com/print/POWERnews/AEP

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Plant, New Haven, W.Va. (of which 450 MW will be re tired this year and 600 MW retired in 2014); and th e 100-MW Picway Plant, Lockbourne, Ohio. AEP also expects to retire or convert the following units: Big Sandy Plant, Louisa, Ky. – Units 1 and 2 (1,078 MW) retired by Dec. 31, 2014; Big Sandy Unit 1 wou ld be rebuilt as a 640-MW natural gas plant by Dec. 31, 2 015; • Clinch River Plant, Cleveland, Va. – Unit 3 (235 MW ) retired by Dec. 31, 2014; Units 1 and 2 (470 MW t otal) would be refueled with natural gas with a capacity of 422 MW by Dec. 31, 2014; • Conesville Plant, Conesville, Ohio – Unit 3 (165 MW ) retired by Dec. 31, 2012; Units 5 and 6 (800 MW t otal) would continue operating with retrofits; • Muskingum River Plant, Beverly, Ohio – Units 1-4 (8 40 MW) retired by Dec. 31, 2014; Muskingum River Un it 5 (600 MW) may be refueled with natural gas with a capacity of 510 MW by Dec. 31, 2014, depending on regulatory treatment in Ohio; •
Tanners Creek Plant, Lawrenceburg, Ind. – Units 1, 2 and 3 (495 MW) retired by Dec. 31, 2014; Unit 4 ( 500 MW) would continue to operate with retrofits; and • Welsh Plant, Pittsburg, Texas – Unit 2 (528 MW) ret ired by Dec. 31, 2014; Units 1 and 3 (1,056 MW) wou ld continue to operate with retrofits. • The two coal-fueled generating units at Northeaster n Plant (935 MW) in Oolagah, Okla., would be idled for a year or more while emission reduction equipment is installed. Both units would be idled beginning Jan. 1, 2016. One unit would return to service by Dec. 31, 2016. The other unit would return to service by Dec . 31, 2017. •

Sources: POWERnews , AEP

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### Page 2 of 2 AEP to Retire 6 GW of Coal Generation Amid EPA Regulation Concerns

7/18/2011 http://www.powermag.com/print/POWERnews/AEP

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