American Electric Pollution Costs to Fall on Lower Coal Use

American Electric Power Co., the largest U.S. coal consumer, expects to spend $4 billion to $5 billion on pollution controls at its coal-fueled plants through 2020, less than the $6 billion to $8 billion it had estimated in 2011.

Spending needed to comply with Environmental Protection Agency regulations was lowered by rule changes and American Electric’s plans to reduce its coal consumption as it burns more natural gas, Nicholas Akins, chief executive officer of the Columbus, Ohio-based power company said in a meeting with analysts today.

American Electric expects its coal plants to generate about half of its power by decade’s end, down from 65 percent, Akins said.

The company has modified coal plants to operate efficiently at lower output when demand drops, or supply increases from other generation such as gas-fueled plants or wind farms, Akins said in an interview after the meeting.

Gas-burning plants previously idle or little-used in winter have been modified to prevent equipment from freezing up, he said.

Output by existing gas-fueled plants probably peaked last year, limited by pipeline capacity, Akins said.

Switching between the fuels will continue this year, he predicted. AEP burns gas when the fuel costs $3.25 per million British thermal units or less and coal when it costs more, he said.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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