December 9, 2014 Read More →

New EPA Rule Hits Coal-Fired Plants; Oil Price Hurts ‘Megaprojects’; Bothered in Birmingham

Coal-ash sludge in Hamilton, Tenn.

Coal-ash sludge in Hamilton, Tenn.

ELECTRICITY PLANTS THAT ARE HEAVILY DEPENDENT ON COAL COULD PAY ‘A PARTICULARLY HEAVY PRICE’ UNDER NEW RULES on the disposal of coal ash and steam-generator effluents, SLN reports this week.

The SNL article, by Eric Wolf, notes that the EPA will probably implement the regulations this month, and that, according to a report by Bernstein Research, companies like FirstEnergy, NRG Energy, and Dynegy will have to devote a significant percentage of their capital expenses to compliance.

Excerpts.

  • “The combination of the two rules could be costly for generators, authors Hugh Wynne, Francois Broquin and Samuel Shrank said in the report. Bernstein Research did not include dollar figures in the report, preferring to normalize the figures as a percentage of market cap.”
  • “Among unregulated generators, NRG Energy Inc follows Dynegy (between 15% and 20%) as the hardest hit, with compliance costing the company between 4% and 8% of its $9.4 billion market cap. FirstEnergy Corp. followed with a hit of between 3% and 5% of its $15.8 billion cap.”
  • “Among regulated utilities, ALLETTE Inc. will find compliance the most expensive, with compliance between 2% and 9% of its $2.3 billion cap. Vectren Corp comes in next with a compliance cost of between 3% and 8% of its $3.7 billion market cap. Unlike the merchant generators, regulated utilities can hope to recover some or all of the cost from ratepayers.”

Here’s the full article (subscription required).

‘CRUDE OIL’S FALL PRESSURES ENERGY MEGAPROJECTS’ IS THE HEADLINE THIS MORNING in the Wall Street Journal over a piece on how the recent downtown in oil markets may affect the industry’s ability to make investments in new fossil-fuel development.

The article, by Justin Scheck, says that projects that seemed viable as recently as a few months ago appear increasingly unbankable today. Scheck reports that current crude prices of less than $70 a barrel make it implausible that companies like ConocoPhillips, Exxon Mobil, Royal Dutch Shell and Chevron will being new development of deepwater or tar-sands reverses.

Excerpts:

  • “Big, long-lived fields in an era of $100-a-barrel Brent, the price that benchmark oil has fetched for much of the past few years, were a good formula for earnings gains.Monday’s price of $66.19 a barrel for deliveries next month isn’t part of that equation.”
  • “Even before oil prices began falling earlier this year, companies have been delaying or canceling projects for cost worries. Chevron and BP are reviewing plans for offshore projects in the U.K. and U.S. that could cost billions of dollars.”
  • “Analysts such as Bernstein Research’s Iain Pyle said oil companies will have to re-examine some of their big investments. If oil prices don’t rebound soon, “what we’re going to see is projects getting canceled,’ he said.”

Here’s the full article (subscription required).

BIRMINGHAM (ALA.) NEWS COLUMNIST JOHN ARCHIBALD HAS A BITING TAKE TODAY ON ALABAMA POWER’S LATEST RATE-INCREASE PROPOSAL.

Archibald writes that the utility and the Alabama Public Commission are all but one and the same and that their shenanigans are costing rank-and-file ratepayers.

Excerpts:

  • “Alabama Power says it. The PSC buys it. You will pay for it.”
  • “All three current members of the PSC campaigned on the premise that Barack Obama and his EPA are out to kill coal and wreak havoc on Alabama electric bills. All three promised to protect Alabama consumers from the nasty EPA.”
  • “Turns out they ‘protect’ us by rubber-stamping rate increases without transparency or accountability.”

Here’s the full column, which appears under the headline “PSC Candidates Pledged to Protect Alabama From Obama. Looks Like They Suck at Their Jobs.”

— Karl Cates
[email protected]
Twitter @ieefa_institute

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