Allegheny Power 2011 Annual Report Download - page 70

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on July 13, 2011. On January 3, 2012, the Court denied MP's motion to dismiss or stay the CWA citizen suit but without prejudice
to re-filing in the future. MP is currently seeking relief from the arsenic limits through WVDEP agency review.
In June 2011, the West Virginia Highlands Conservancy, the West Virginia Rivers Coalition, and the Sierra Club served a60-Day
Notice of Intent required prior to filing a citizen suit under the CWA for alleged failure to obtain a permit to construct the fly ash
impoundments at the Albright Plant.
FirstEnergy intends to vigorously defend against the CWA matters described above but, except as indicated above, cannot predict
their outcomes or estimate the possible loss or range of loss.
Monongahela River Water Quality
In late 2008, the PA DEP imposed water quality criteria for certain effluents, including TDS and sulfate concentrations in the
Monongahela River, on new and modified sources, including the scrubber project at the coal-fired Hatfield's Ferry Plant. These
criteria are reflected in the current PA DEP water discharge permit for that project. AE Supply appealed the PA DEP's permitting
decision, which would require it to incur estimated costs in excess of $150 million in order to install technology to meet TDS and
sulfate limits in the permit or negatively affect its ability to operate the scrubbers as designed. The permit has been independently
appealed by Environmental Integrity Project and Citizens Coal Council, which seeks to impose more stringent technology-based
effluent limitations. Those same parties have intervened in the appeal filed by AE Supply, and both appeals have been consolidated
for discovery purposes. An order has been entered that stays the permit limits that AE Supply has challenged while the appeal is
pending. A hearing on the parties' appeals was scheduled to begin in September 2011, however the Court stayed all prehearing
deadlines on July 15, 2011 to allow the parties additional time to work out a settlement, and has rescheduled a hearing, if necessary,
for July 2012. If these settlement discussions are successful, AE Supply anticipates that its obligations will not be material. AE
Supply intends to vigorously pursue these issues, but cannot predict the outcome of these appeals or estimate the possible loss
or range of loss.
In a parallel rulemaking, the PA DEP recommended, and in August 2010, the Pennsylvania Environmental Quality Board issued,
a final rule imposing end-of-pipe TDS effluent limitations. FirstEnergy could incur significant costs for additional control equipment
to meet the requirements of this rule, although its provisions do not apply to electric generating units until the end of 2018, and then
only if the EPA has not promulgated TDS effluent limitation guidelines applicable to such units.
In December 2010, PA DEP submitted its CWA 303(d) list to the EPA with a recommended sulfate impairment designation for an
approximately 68 mile stretch of the Monongahela River north of the West Virginia border. In May 2011, the EPA agreed with PA
DEP's recommended sulfate impairment designation. PA DEP's goal is to submit a final water quality standards regulation,
incorporating the sulfate impairment designation for EPA approval by May, 2013. PA DEP will then need to develop a TMDL limit
for the river, a process that will take approximately five years. Based on the stringency of the TMDL, FirstEnergy may incur significant
costs to reduce sulfate discharges into the Monongahela River from the coal-fired Hatfield's Ferry and Mitchell Plants in Pennsylvania
and the coal-fired Fort Martin Plant in West Virginia.
In October 2009, the WVDEP issued the water discharge permit for the Fort Martin Plant. Similar to the Hatfield's Ferry water
discharge permit, the Fort Martin permit imposes effluent limitations for TDS and sulfate concentrations. The permit also imposes
temperature limitations and other effluent limits for heavy metals that are not contained in the Hatfield's Ferry water discharge
permit. Concurrent with the issuance of the Fort Martin permit, WVDEP also issued an administrative order that sets deadlines for
MP to meet certain of the effluent limits that are effective immediately under the terms of the permit. MP appealed the Fort Martin
permit and the administrative order. The appeal included a request to stay certain of the conditions of the permit and order while
the appeal is pending, which was granted pending a final decision on appeal and subject to WVDEP moving to dissolve the stay.
The appeals have been consolidated. MP moved to dismiss certain of the permit conditions for the failure of the WVDEP to submit
those conditions for public review and comment during the permitting process. An agreed-upon order that suspends further action
on this appeal, pending WVDEP's release for public review and comment on those conditions, was entered on August 11, 2010.
The stay remains in effect during that process. The current terms of the Fort Martin permit would require MP to incur significant
costs or negatively affect operations at Fort Martin. Preliminary information indicates an initial capital investment in excess of the
capital investment that may be needed at Hatfield's Ferry in order to install technology to meet the TDS and sulfate limits in the
Fort Martin permit, which technology may also meet certain of the other effluent limits in the permit. Additional technology may be
needed to meet certain other limits in the permit. MP intends to vigorously pursue these issues but cannot predict the outcome of
these appeals or estimate the possible loss or range of loss.
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.
In December 2009, in an advance notice of public rulemaking, the EPA asserted that the large volumes of coal combustion residuals
produced by electric utilities pose significant financial risk to the industry. In May 2010, the EPA proposed two options for additional