April 24, 2012 / 5:15 PM / 6 years ago

UPDATE 2-AEP to reduce emissions at Oklahoma coal plant

* AEP to upgrade one coal unit, shut another
    * AEP Oklahoma to become more reliant on natural gas
    * Energy companies to shut over 30,000 MW of coal power

    April 24 (Reuters) - American Electric Power Co Inc 
agreed with U.S. environmental regulators to reduce emissions
from the two coal units at the 1,815-megawatt (MW) Northeastern
power plant in Oklahoma.	
    Ohio-based power company AEP said in a release its Oklahoma
utility, Public Service Company of Oklahoma (PSO), would upgrade
one of the 460-MW units at the Northeastern plant in 2015 and
retire the other 460-MW unit in 2016.	
    The emissions upgrades would reduce nitrogen oxides, sulfur
dioxide, mercury and other toxic gases and cost PSO about $175
million, company representatives told Reuters.	
    AEP said the Oklahoma utility entered into an agreement in
principle with the U.S. Environmental Protection Agency (EPA),
the State of Oklahoma and the Sierra Club environmental group.	
    That agreement addresses the Oklahoma PSO's future
obligations under the EPA's Regional Haze rule and EPA's Mercury
and Air Toxics Standard (MATS), AEP said.	
    Under the agreement, PSO would reduce emissions by
installing control equipment on one of the Northeastern units in
2015 and retire the other unit in 2016.	
    The coal unit with the emissions controls would be retired
in the 2025-26 timeframe.	
    Over the past couple of years, energy companies have
announced the retirement of more than 30,000 MW of coal-fired
generating capacity due to a combination of historically low
natural gas prices, increasingly more stringent federal
environmental regulations and weak demand power growth.	
    For a Factbox on coal unit to retire see 	
    The Northeastern plant has several units, including the
131-MW natural gas and oil-fired Unit 1, which entered service
in 1961, 462-MW natural gas-fired Unit 2 (1970), 460-MW
coal-fired Units 3 (1979) and 4 (1980), two 149-MW natural gas
combustion turbines (2001), according to federal data.	
    AEP said following this agreement PSO would withdraw its
lawsuit against the EPA regarding the Regional Haze rule.	
    "This landmark agreement outlines a clear and cost-effective
path for compliance by PSO's Oklahoma coal-fired generating
units with the EPA's new rules," Stuart Solomon, PSO's president
and chief operating officer said in the release.	
    "It allows PSO to implement a compliance plan that resolves
the company's most significant environmental issues, provides a
manageable transition for our generation fleet, and assures
continued reliability for our customers," Solomon said.	
    PSO gets about 31 percent of the power it sells to customers
from gas-fired plants, 37 percent from coal, 14 percent from
wind and 18 percent from purchased power. With the shutdown of
the coal units, the company representatives said the company
would be more reliant on natural gas-fired generation.	
    AEP said PSO will file with Oklahoma regulators an
environmental compliance plan that reflects the agreement. The
regulators must approve costs associated with the plan before
the utility can recover those costs from customers.	
    The company representatives could not say what impact the
agreement would have on rates in part because the timing on
putting the emission control systems in service was still a few
years out.	
    Oklahoma has some of the lowest cost in the nation. The
average retail cost of power in Oklahoma is about 7.6 cents per
kilowatt hour versus the national average of 9.8 cents,
according to federal data.	
    PSO has more than 4,300 MW of generating capacity and serves
more than 532,000 power customers in eastern and southwestern
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