Allegheny Power 2010 Annual Report Download - page 65

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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.
Regulation of Waste Disposal
Federal and state hazardous waste regulations have been promulgated as a result of the Resource Conservation and
Recovery Act of 1976, as amended, and the Toxic Substances Control Act of 1976. Certain fossil-fuel combustion
residuals, such as coal ash, were exempted from hazardous waste disposal requirements pending the EPA’s evaluation
of the need for future regulation. In February 2009, the EPA requested comments from the states on options for
regulating coal combustion residuals, including whether they should be regulated as hazardous or non-hazardous waste.
On December 30, 2009, in an advanced notice of public rulemaking, the EPA said that the large volumes of coal
combustion residuals produced by electric utilities pose significant financial risk to the industry. On May 4, 2010, the EPA
proposed two options for additional regulation of coal combustion residuals, including the option of regulation as a special
waste under the EPA’s hazardous waste management program which could have a significant impact on the
management, beneficial use and disposal of coal combustion residuals. FGCO’s future cost of compliance with any coal
combustion residuals regulations which may be promulgated could be substantial and would depend, in part, on the
regulatory action taken by the EPA and implementation by the EPA or the states.
The Utilities have been named as potentially responsible parties at waste disposal sites, which may require cleanup
under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. Allegations of disposal of
hazardous substances at historical sites and the liability involved are often unsubstantiated and subject to dispute;
however, federal law provides that all potentially responsible parties for a particular site may be liable on a joint and
several basis. Environmental liabilities that are considered probable have been recognized on the consolidated balance
sheet as of December 31, 2010, based on estimates of the total costs of cleanup, the Utilities' proportionate responsibility
for such costs and the financial ability of other unaffiliated entities to pay. Total liabilities of approximately $104 million
(JCP&L - $69 million, TE - $1 million, CEI - $1 million, FGCO - $1 million and FirstEnergy - $32 million) have been
accrued through December 31, 2010. Included in the total are accrued liabilities of approximately $64 million for
environmental remediation of former MGPs and gas holder facilities in New Jersey, which are being recovered by JCP&L
through a non-bypassable SBC.