US power sector seeks savings in flexible EPA regs

Thu May 31, 2012 12:33pm EDT

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* EPA regs to cost $275 bln in 2010-2035 -power sector study

* EPRI wants a couple more years to comply with rules

* Cheap natgas could cause 100 GW of coal retirements

May 31 (Reuters) - The U.S. electric power industry's research arm released a study on Thursday saying power companies could save about $100 billion between 2010 and 2035 if U.S. pollution rules were more flexible.

The Electric Power Research Institute (EPRI) estimated it would cost the U.S. economy up to $275 billion to meet current and pending U.S. Environmental Protection Agency (EPA) regulations from 2010-2035 if the current timeline is followed.

The EPA wants the electric industry to reduce power plant emissions and reduce the amount of water used to cool generating facilities. It also plans to regulate coal ash.

EPRI said its proposed "alternative flexible path" would reduce costs while achieving the same level of compliance.

Under the current course, EPRI said about 202 gigawatts (GW) of existing coal-fired capacity would remain financially viable, 61 GW would be retired, and the remaining 54 GW would either be retired or retrofitted depending on whether regulators allow for cost recovery, among other things.

In EPRI's "flexible path" alternative, about 288 GW would remain financially viable, only 25 GW would be retired and only 4 GW would either be retired or retrofitted.

The United States has about 1,039 GW of generating capacity, including 317 GW fueled by coal. A gigawatt represents 1,000 megawatts. One megawatt is enough power for about 1,000 homes.

EPA regulations require compliance with Mercury and Air Toxics (MATS) rules by 2015, cooling water intake rules by 2018, coal ash rules by 2020 and sulfur dioxide and nitrogen oxide emissions rules by 2018.

Under EPRI's flexible approach, utilities would get an additional two years to comply with nitrogen oxide and air toxics rules, among other things.

In addition, the low cost of natural gas - EPRI predicted a price of $4 per million British thermal units in 2020 - would cause about 100 GW of coal units to shut under current EPA rules.

Over the past decade, natural gas has traded in a wide range from less than $2 per million BTU to more than $15, averaging about about $6. The current spot cost is $2.45.

EPRI said its flexible approach would reduce the impact low natural gas prices have on coal retirements. (Reporting By Scott DiSavino; Editing by David Gregorio)

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