Allegheny Power 2010 Annual Report Download - page 133

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regulated as “air pollutants” under the CAA. In April 2010, the EPA finalized new GHG standards for model years 2012 to
2016 passenger cars, light-duty trucks and medium-duty passenger vehicles and clarified that GHG regulation under the
CAA would not be triggered for electric generating plants and other stationary sources until January 2, 2011, at the
earliest. In May 2010, the EPA finalized new thresholds for GHG emissions that define when permits under the CAA’s
NSR program would be required. The EPA established an emissions applicability threshold of 75,000 tons per year (tpy)
of carbon dioxide equivalents (CO2e) effective January 2, 2011 for existing facilities under the CAA’s PSD program, but
until July 1, 2011 that emissions applicability threshold will only apply if PSD is triggered by non-carbon dioxide
pollutants.
At the international level, the Kyoto Protocol, signed by the U.S. in 1998 but never submitted for ratification by the U.S.
Senate, was intended to address global warming by reducing the amount of man-made GHG, including CO2, emitted by
developed countries by 2012. A December 2009 U.N. Climate Change Conference in Copenhagen did not reach a
consensus on a successor treaty to the Kyoto Protocol, but did take note of the Copenhagen Accord, a non-binding
political agreement which recognized the scientific view that the increase in global temperature should be below two
degrees Celsius; include a commitment by developed countries to provide funds, approaching $30 billion over the next
three years with a goal of increasing to $100 billion by 2020; and establish the “Copenhagen Green Climate Fund” to
support mitigation, adaptation, and other climate-related activities in developing countries. Once they have become a
party to the Copenhagen Accord, developed economies, such as the European Union, Japan, Russia and the United
States, would commit to quantified economy-wide emissions targets from 2020, while developing countries, including
Brazil, China and India, would agree to take mitigation actions, subject to their domestic measurement, reporting and
verification.
On September 21, 2009, the U.S. Court of Appeals for the Second Circuit and on October 16, 2009, the U.S. Court of
Appeals for the Fifth Circuit reversed and remanded lower court decisions that had dismissed complaints alleging
damage from GHG emissions on jurisdictional grounds. However, a subsequent ruling from the U.S. Court of Appeals for
the Fifth Circuit reinstated the lower court dismissal of a complaint alleging damage from GHG emissions. These cases
involve common law tort claims, including public and private nuisance, alleging that GHG emissions contribute to global
warming and result in property damages. On December 6, 2010, the U.S. Supreme Court granted a writ of certiorari to
the Second Circuit in Connecticut v. AEP. Briefing and oral argument are expected to be completed in early 2011 and a
decision issued in or around June 2011. While FirstEnergy is not a party to this litigation, FirstEnergy and/or one or more
of its subsidiaries could be named in actions making similar allegations.
FirstEnergy cannot currently estimate the financial impact of climate change policies, although potential legislative or
regulatory programs restricting CO2 emissions, or litigation alleging damages from GHG emissions, could require
significant capital and other expenditures or result in changes to its operations. The CO2 emissions per KWH of electricity
generated by FirstEnergy is lower than many regional competitors due to its diversified generation sources, which include
low or non-CO2 emitting gas-fired and nuclear generators.
Clean Water Act
Various water quality regulations, the majority of which are the result of the federal Clean Water Act and its amendments,
apply to FirstEnergy’s plants. In addition, Ohio, New Jersey and Pennsylvania have water quality standards applicable to
FirstEnergy’s operations.
The EPA established new performance standards under Section 316(b) of the Clean Water Act for reducing impacts on
fish and shellfish from cooling water intake structures at certain existing electric generating plants. The regulations call for
reductions in impingement mortality (when aquatic organisms are pinned against screens or other parts of a cooling
water intake system) and entrainment (which occurs when aquatic life is drawn into a facility’s cooling water system). The
EPA has taken the position that until further rulemaking occurs, permitting authorities should continue the existing
practice of applying their best professional judgment to minimize impacts on fish and shellfish from cooling water intake
structures. On April 1, 2009, the U.S. Supreme Court reversed one significant aspect of the Second Circuit’s opinion and
decided that Section 316(b) of the Clean Water Act authorizes the EPA to compare costs with benefits in determining the
best technology available for minimizing adverse environmental impact at cooling water intake structures. The EPA is
developing a new regulation under Section 316(b) of the Clean Water Act consistent with the opinions of the Supreme
Court and the Court of Appeals which have created significant uncertainty about the specific nature, scope and timing of
the final performance standard. FirstEnergy is studying various control options and their costs and effectiveness,
including pilot testing of reverse louvers in a portion of the Bay Shore power plant’s water intake channel to divert fish
away from the plant’s water intake system. On November 19, 2010, the Ohio EPA issued a permit for the Bay Shore
power plant requiring installation of reverse louvers in its entire water intake channel by December 31, 2014. Depending
on the results of such studies and the EPA’s further rulemaking and any final action taken by the states exercising best
professional judgment, the future costs of compliance with these standards may require material capital expenditures.
In June 2008, the U.S. Attorney’s Office in Cleveland, Ohio advised FGCO that it is considering prosecution under the
Clean Water Act and the Migratory Bird Treaty Act for three petroleum spills at the Edgewater, Lakeshore and Bay Shore
plants which occurred on November 1, 2005, January 26, 2007 and February 27, 2007. FGCO is unable to predict the
outcome of this matter.