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Southern Says U.S. EPA Rules to Cost as Much as $18 Billion

Southern Co. (SO), the biggest U.S. utility owner by market value, said proposed Environmental Protection Agency rules are “misguided” and will cost the company as much as $18 billion.

The planned regulations “are misguided in their content and timing,” Southern Chairman and Chief Executive Officer Thomas Fanning said today in a statement.

Southern, based in Atlanta, is among energy companies that say new rules from President Barack Obama’s EPA will force some coal-fired power plants to close, and may lead to higher energy costs. Electricity prices for Southern customers may increase an additional 10 percent to 20 percent during the next 10 years, according to the company.

The EPA regulations will “only impede the U.S. economic recovery, reduce our ability to create jobs and add to the economic burdens of our customers,” Fanning said.

Air, water and waste rules affecting coal-fueled electric utilities will require $13 billion to $18 billion in capital expenses through 2020, according to the company.

EPA Administrator Lisa Jackson has said the agency’s rules are needed to protect public health and the environment. EPA spokesmen didn’t immediately respond to requests for comment on Southern’s projections.

The company said the EPA actions, including a proposal to cut mercury and other air toxics from power plants, will require installation of pollution controls on about 12,000 megawatts of coal-fired generation, or about 60 percent of the company’s fleet. The rules also will contribute to the shutdown of units with a total capacity of 4,000 megawatts.

‘Sensible Solution’

Southern, which filed comments with the EPA today, said it will work with the agency for a “more sensible solution.”

The company is seeking a longer time frame to comply with the EPA’s toxic-pollutants rule. The three-year compliance deadline is “much too short,” Fanning said.

Projects to replace generation typically take an average of four to six years and installation of technologies to reduce sulfur-dioxide emissions range from 40 months to 69 months, according to the company.

Southern, which has 4.4 million customers in four states and more than 42,000 megawatts of generating capacity, said that it’s invested more than $8 billion in emissions-reduction equipment since 1990, cutting smog-causing pollution by 70 percent while energy consumption has increased 40 percent.

To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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