Coal-fired generator, ratepayers on hook for billions to cut pollution in Ohio: are greenhouse gases next?

American Electric Power (AEP), one of the biggest power generators in the U.S., recently settled a lawsuit that alleged it violated clean air laws. AEP agreed to pay over $6 billion to install pollution control devices at 16 of its coal-fired plants. Five of the plants are in Ohio, a regulated state, which means the cost of upgrades to those plants will be borne by ratepayers.

What will happen with Ontario’s coal plants? If the McGuinty Liberals win today’s election, their plan is to phase out coal by 2014. Should anybody copy the action against AEP and sue Ontario Power Generation, the company that owns the coal plants, what will the government do? My guess is they will install control devices. Currently, only six of the 15 individual generating units in Ontario are equipped with any kind of pollution controls. Installing controls on all or most of the remaining units would cost billions, but would keep coal available as part of our generation mix.

It comes down to a choice between natural gas and coal. Pollution emissions from “scrubbed” coal are on a par with those from natural gas. Which means cost and grid availability ought to be the main decision criteria.

But as I have mentioned elsewhere (see article), bona fide air pollution, i.e., nitrogen and sulphur, is not the only problem facing coal-based generators. Most coal exhaust is carbon dioxide (CO2), the principal greenhouse gas (GHG). If a public nuisance action against a U.S. coal generator succeeds, on the basis of CO2’s role in climate change, the financial implications could be staggering. This is why there will be a nuclear renaissance in the U.S. Probably in Canada too.

Watch ratepayer activism in Ohio. If there’s not much fuss over the hikes associated with the new pollution controls on AEP’s generators, that could be the way to finance nuclear plants in regulated areas.

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[…] The second factor is rising pressure on the UK government to introduce a windfall tax on power generators. Firms like Drax, as I pointed out (see article), have earned massive profits because of the low cost of carbon emissions under the nascent European Emission Trading Scheme. If the price of carbon doesn’t attain a meaningful level under the new, supposedly tougher, ETS rules, EU governments are under pressure to use a windfall tax to ensure carbon emissions come with a meaningful price. (see 2007/06/20, 2007/08/15, 2007/10/10.) […]