Power Plants Brace for New EPA Rules Adding to Coal Woes

Photographer: Jeff Willhelm/Charlotte Observer/MCT via Getty Images

The Environmental Protection Agency is scheduled to issue a proposal tomorrow for toxic-waste disposal in water, and environmentalists are pressing the agency to ban use of slurry ponds for the disposal of waste left over after coal is burned to generate power. Close

The Environmental Protection Agency is scheduled to issue a proposal tomorrow for... Read More

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Photographer: Jeff Willhelm/Charlotte Observer/MCT via Getty Images

The Environmental Protection Agency is scheduled to issue a proposal tomorrow for toxic-waste disposal in water, and environmentalists are pressing the agency to ban use of slurry ponds for the disposal of waste left over after coal is burned to generate power.

Power producers such as Dynegy Corp. (DYN) and Duke Energy Corp. (DUK) are bracing for new U.S. rules on the water they discharge, standards that may impose further costs on the embattled coal industry.

The Environmental Protection Agency is scheduled to issue a proposal tomorrow for toxic-waste disposal in water, and environmentalists are pressing the agency to ban use of slurry ponds for the disposal of waste left over after coal is burned to generate power. The EPA says power plants are the biggest industrial source of water contamination.

“Coal plants account for a shocking amount of our water pollution,” Mary Anne Hitt, director for the Sierra Club’s Beyond Coal campaign, said in an interview. As utilities remove toxic chemicals such as mercury from their smokestacks, those pollutants is ending up in water waste, she said.

Depending on changes demanded by the EPA, it could require millions of dollars in spending to upgrade individual plants, company lobbyists said in a document provided at a meeting with White House officials last month and posted on the website of the Office of Management and Budget.

Coal is under mounting pressure from cheap natural gas, tougher federal pollution standards and state-level energy efficiency requirements. The Sierra Club’s coal campaign in early March said more than 142 plants has been closed. American Electric Power (AEP) Co. in February said it would shut three plants. The Russell 300 Coal Index of nine U.S. producers has tumbled 35 percent in the past year.

Galvanized Industry

Regulations on coal’s use has galvanized company executives and Republican lawmakers, who complain of a “war on coal” by President Barack Obama’s EPA.

The regulations on water discharges will add to EPA measures on coal-fired generators issued since Obama took office in 2009. The administration’s most-expensive rule would cut mercury and other toxic air emissions from such plants. The measure due tomorrow would prevent similar minerals, arsenic and mercury, in water releases from the plants.

The EPA agreed to issue the rules as part of a legal settlement with the Sierra Club and Defenders of Wildlife. It’s legal deadline for issuing the proposal is tomorrow. The final regulations are scheduled next year.

This rule is separate yet related to a long-stalled proposal from the EPA to regulate the coal-ash produced at power plants. Those rules have been delayed, and the agency hasn’t set a deadline for their release.

Coal Ash

The effluent proposal scheduled for release this week could affect disposal of both coal ash, what remains after coal is burned, and the scrubber sludge, which are particles pulled out of the plant’s smokestack in order to meet air-emission rules. Those scrubber wastewaters generally contain significant levels of metals, including arsenic, mercury, and selenium, according to an EPA study.

If the EPA mandates the use of dry-ash handling, it would mean “significant conversion costs” for plants not now using it, Hugh Wynn, a utility analyst for Sanford C. Bernstein & Co., said in a research note April 8. Wynn said independent power producer Dynegy could be among the most affected by the change.

The impact on Dynegy will be comparable to that for other, similar companies, said Katy Sullivan, a company spokeswoman. Both Sullivan and Tom Williams, a spokesman for Duke, said the rule would affect “all of our coal plants, some more than others.” Both declined further comment until the EPA proposal is released.

Hitt said she expects complaints: “I am sure we will see great hand wringing from industry, but we can clean this up at a very minimal cost,” she said.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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