March 29 (Bloomberg) -- Utilities such as Entergy Corp. face U.S. rules aimed at preventing fish from being sucked into cooling-water systems and costing industry $384 million a year, the Environmental Protection Agency said.
The Obama administration’s proposal introduced yesterday will affect more than 1,200 facilities and save billions of aquatic organisms, including 615 million fish and shellfish a year, the agency said in an e-mailed statement.
The EPA rule, part of a court settlement with environmental groups, will cover power plants and factories that pull water from rivers or lakes to cool machines. Existing facilities will work with states to determine how to meet the requirements while new units will have to use closed-cycle cooling, a system that draws less water and ensnares fewer fish.
“The EPA’s approach is likely to minimize the industry’s cost of compliance,” Hugh Wynne, an analyst at Sanford Bernstein & Co. in New York, wrote today in a report to clients.
The EPA’s pending proposal under the Clean Water Act had been singled out by energy companies, industry groups and Republican lawmakers as a regulation that may burden electric utilities and cause some coal-fired power plants to shut down.
Representative Fred Upton, a Michigan Republican, in December said the rule might cost utilities as much as $300 million per site for coal-fired plants and as much as $1 billion for nuclear generators, exceeding the EPA’s projections.
Exelon Corp., owner of the most U.S. nuclear plants, said today the EPA’s proposed standard doesn’t require existing plants to build costly cooling towers.
“Exelon is encouraged that the rule doesn’t mandate cooling towers as a ‘one-size-fits-all’ technology and allows consideration of site-specific factors, as well as costs and benefits for some of the rule’s requirements,” the Chicago-based company said today in a statement.
Exelon rejected claims from some companies that the EPA rule, along with proposed limits on air toxins from coal-fired power plants, will be detrimental to business.
“Rumors of a train wreck caused by new EPA regulations are simply false,” Joseph Dominguez, senior vice president of federal regulatory affairs, public policy and communications, said today in a statement. “EPA has done a good job listening to the industry and moving the ball forward.”
The Edison Electric Institute, a Washington-based trade group representing the utility industry, criticized the plan, arguing that the agency will have states following guidelines that favor closed-cycle cooling technology, such as towers.
“EPA’s proposal could result in premature plant retirements, capacity shortfalls and higher costs for customers,” the group said today in a statement.
Entergy, a New Orleans-based owner of coal-fired and nuclear power plants, had said the cooling-water rule may force it to spend $1.2 billion building two cooling towers at its Indian Point plant on the Hudson River north of New York City.
The EPA said installing closed-cycle cooling for new units would cost about $14.7 million a year. The cost to a household electric bill once the rule has been in place for several years would average less than $2 a year, according to the EPA.
Entergy is reviewing the proposal and has no comment, said Alex Schott, a spokesman.
The agency said it will work to improve its proposal through outside suggestions.
“The input we receive will make certain that we end up with a flexible and effective rule to protect the health of our waters and ecosystems,” said Nancy Stoner, acting assistant administrator for the EPA Office of Water, in the statement.
The public has 90 days to comment and the agency must take final action by July 27, 2012, according to the EPA.
The rule will cover about 1,260 industrial operations, including 670 power plants and about 590 factories, according to the agency.
Two environmental groups, the Natural Resources Defense Council and Riverkeeper, criticized the EPA for shifting the matter to the states. The proposal won’t stop plants from harming billions of fish that get pinned against screens covering water intake pipes, according to the organizations.
“Instead of moving toward modernizing America’s power plants and protecting our water resources, the draft rule moves us backwards,” Steve Fleischli, a senior attorney in the water program at the New York-based NRDC, said yesterday in a statement. “EPA has chosen the path of least resistance by caving into industry pressure and punting this issue to state agencies.”
Fish Kills Limited
Existing facilities using more than 2 million gallons of water a day must limit the number fish killed, or slow the pace of water pulled into cooling systems, which lets fish swim away. A facility drawing in at least 125 million gallons a day must develop “site-specific” controls, the EPA said.
Plants that add electrical generation at an existing site would be required to install technology equivalent to a “closed-cycle” system that reuses water. A closed cycle typically refers to cooling towers, according to the EPA.
The EPA’s proposal follows rules issued in 2004 by President George W. Bush’s EPA. Those standards, the first national cooling water rules for existing plants, were suspended by the EPA three years later amid litigation. The Bush rules didn’t require a “closed cycle” cooling tower approach the agency had previously mandated for new plants.
Some plants, such as Entergy’s Indian Point, use “once through” systems, which take in water directly and then spew it back out at higher temperatures.
Bush’s EPA said closed-cycle systems would be unduly expensive and that other technologies would achieve close to the same results.
In a victory for industry, the Supreme Court ruled in 2009 that the EPA may balance business costs against benefits in deciding whether to impose the new requirements on power plants, overturning a lower court decision.
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