Constellation Energy Group Inc. (CEG) spent $885 million cleaning up pollution from its coal-fired power plant in Baltimore. Now it’s urging the White House to reject pleas from competitors that they can’t do the same before a 2015 deadline.
Constellation’s Brandon Shores spewed the most hazardous materials from its smokestacks of any U.S. power plant in 2008. Forced to act by a state law, the company reduced the emissions by more than 90 percent by 2010.
It designed and built a combination of chemical scrubbers and fabric filters in less than three years. That’s the deadline in a proposal by the Environmental Protection Agency that’s now awaiting approval by the White House. While rivals such as American Electric (AEP) Power Co. are lobbying for a delay, Constellation is urging President Barack Obama to stick to the EPA’s plans.
“Long timelines are the enemy of good results,” Paul Allen, chief environmental officer of the Baltimore-based company, told reporters Nov. 21. “It’s better to turn all of your energy to it, galvanize the workforce and get it over with.”
The divide in the electric industry contrasts with almost- unanimous opposition to other proposed regulations, such as standards for smog-producing ozone that Obama ended up scrapping in September. The split should make it easier politically for the White House to stand by the EPA’s proposal, according to Eric Schaeffer, executive director of the Environmental Integrity Project, an advocacy group in Washington.
Southern Seeks Delay
Allen said he cited Brandon Shores as an example in a meeting with officials from the White House Office of Management and Budget on Nov. 17. “We are unapologetic that we would like to see a level playing field,” he said.
The so-called air toxics rule, which would mandate that coal-fired plants cut emissions of mercury, arsenic and acid gases, would cost $11 billion in 2015, according to the EPA, making it one of the most expensive regulations weighed by the Obama administration. It’s scheduled to be issued in two weeks.
The EPA says that cutting those pollutants would save lives and create 9,000 more jobs than would be lost, as power producers install pollution-scrubbing systems or build new plants.
American Electric and Southern Co. (SO), the two biggest U.S. producers of electricity from coal, are pushing the administration to put off the new regulations or delay their deadline for implementation. Those companies say the EPA’s proposed deadline can’t be met.
‘Just Not Achievable’
“Three years is absolutely inadequate -- at least six years are needed to comply,” Anthony Topazi, chief operating officer of Atlanta-based Southern, said in testimony to the Federal Energy Regulatory Commission on Nov. 30. “We cannot err on the side of putting the reliability of the system at risk.”
“The timetable does not make sense,” Nick Akins, the company’s chief executive officer, said in an interview Nov. 2. “It’s just not achievable.”
Applying for Time
American Electric estimates that installing a required pollution scrubber and waste-water equipment can cost $520 million to $640 million for an 800-megawatt plant. That’s in line with the $885 million Constellation spent on Brandon Shores, a plant that can generate 1,300 megawatts, enough to power more than 1 million typical homes, based on data from the U.S. Energy Information Administration.
Constellation, which sells power in competitive markets, can move faster than largely regulated utilities such as American Electric, which must get approval from state regulators before taking on costly new capital projects, according to Melissa McHenry, an American Electric spokeswoman.
The Office of Management and Budget is reviewing the EPA’s proposal and may change it. The EPA would let power producers apply for more time if they try and fail to meet the 2015 deadline, according to people familiar with its proposal. That stops short of the across-the-board delay sought by some power companies.
Constellation’s support for the EPA’s regulation and deadlines is backed by Exelon Corp. (EXC), the largest U.S. producer of nuclear power, which has bid to purchase Constellation for about $7.9 billion in stock. Public Service Enterprise Group Inc., which spent $1.3 billion since 2007 to clean up two coal- fired New Jersey power plants, also opposes putting off the deadline.
Among those lobbying for a delay are the nation’s community and state-owned utilities, which together have 200 coal-fired plants. They say they will need 77 months, or more than six years, to plan for upgrades, convene public meetings, obtain financing and build the control technologies.
“The sheer scale of the efforts will be enormous,” Mark Crisson, president of the American Public Power Association in Washington, representing such utilities, wrote in a letter to the budget office on Nov. 16.
A tight deadline for plants nationwide to install equipment such as scrubbers may create a shortage of the pollution-control devices and skilled workers, Southern’s Topazi said.
In Baltimore, Heather Lentz, Brandon Shores’ general supervisor, stood on the roof above the rumbling steam generators and pointed to a collection of buildings, on what had been an open field, where the plant’s emissions are cleaned.
Clouds of Steam
Exhaust from the 3,000-degree boilers had shot straight up a smokestack when the plant was built in 1984. It now goes through a structure called a baghouse to pull out the largest particles, and then a catalytic reducer to capture nitrogen oxide. After that it’s blown into the scrubber, where much of the remaining sulfur dioxide is removed by limestone-spiked water.
Billowing clouds of steam rise from the new smokestack. Fly ash, most of which is recycled into concrete, is pulled from the bottom.
In 2008, when the plant’s renovation was under way, it generated 18.6 million pounds of hazardous air pollution, making it the most polluting plant in the country, according to EPA data. By last year that had fallen to 1.6 million pounds, and the complex dropped to 41st of more than 500 plants nationwide.
Constellation says it met the state of Maryland’s pollution-control deadline of Jan. 1, 2010, without a hiccup in delivering electricity.
“It’s entirely possible to comply with these rules and remain a profitable company,” Allen said.
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