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Environmental Regulations

The increasing scope and stringency of environmental regulations pose technical and financial challenges for our industry. These challenges, including uncertainties with timing, scope and magnitude of future environmental regulations, are influencing decisions to upgrade or retire coal-fueled generating units. It also affects the planning process for new generation projects across our industry.

Across our sector, the Edison Electric Institute (EEI) estimates that nearly 70,000 MW of coal-fueled generation will be retired by 2022, which represents a 20 percent reduction of U.S. capacity since 2010. During this period, AEP will retire approximately 6,500 MW of coal-fueled capacity. Approximately another 30,000-49,000 MW of existing coal-based generation could potentially be impacted by 2020 across the country due to the EPA’s Clean Power Plan (CPP). In addition, the CPP proposes to increase the use of existing natural gas combined cycle units and expand the growth of new renewable generation and energy efficiency programs. Not only will these changes have significant cost implications, but the cost to evaluate, design and implement any related upgrades to the transmission system could be equally significant. When considered in context with all of the new pending environmental requirements that apply to the utility industry, our investments and cost to comply will be substantial.

AEP’s active participation in development of new regulations is intended to ensure that new requirements are achievable, based on sound science, consistent with statutory authority, balanced with other rulemakings, weigh the cost of compliance for customers, and can be implemented in a rational time frame. Compliance is important to us, but we also have a responsibility to our investors who make the required capital investment and to our customers, who will ultimately pay for the implementation of compliance strategies and who will continue to expect reliable electric service.

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