Allegheny Power 2014 Annual Report Download - page 67

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announcement on November 12, 2014, President Obama stated a U.S. target of reducing GHG emissions by 26 to 28% by 2025
from 2005 emission levels and China's President stated its GHG emissions will "peak", around 2030 with approximately 20% of its
energy generated by non-fossil fuels by that same year. Due to plant deactivations and increased efficiencies, FirstEnergy anticipates
its CO2 emissions will be reduced 25% below 2005 levels by 2015, exceeding the President’s Climate Action Plan goals both in
terms of timing and reduction levels.
EPA released its final “Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act” in December
2009, concluding that concentrations of several key GHGs constitutes an "endangerment" and may be regulated as "air pollutants"
under the CAA and mandated measurement and reporting of GHG emissions from certain sources, including electric generating
plants. EPA proposed a new source performance standard in September 2013, which would not apply to any existing, modified, or
reconstructed fossil fuel generating units, of 1,000 lbs. CO2/MWH for large natural gas fired units (> 850 mmBTU/hr), and 1,100
lbs. CO2/MWH for other natural gas fired units 850 mmBTU/hr), and 1,100 lbs. CO2/MWH for fossil fuel fired units which would
require partial carbon capture and storage. EPA proposed regulations in June 2014, to reduce CO2 emissions from existing fossil
fuel electric generating units that would require each state to develop state implementation plans by June 30, 2016, to meet EPA's
state specific CO2 emission rate goals. EPA's proposal allows states to request a 1-year extension for single-SIPs (June 30, 2017)
or a 2-year extension for multi-state SIPs (June 30, 2018). EPA also proposed separate regulations imposing additional CO2 emission
limits on modified and reconstructed fossil fuel electric generating units. On January 7, 2015, EPA announced it would complete
all of these so-called "Carbon Pollution Standards" by "midsummer" 2015. On June 23, 2014, the U.S. Supreme Court decided that
CO2 or other GHG emissions alone cannot trigger permitting requirements under the CAA, but that air emission sources that need
PSD permits due to other regulated air pollutants can be required by EPA to install GHG control technologies. On November 13,
2014, the U.S. Court of Appeals for the D.C. Circuit scheduled expedited briefing to consider challenges to prevent EPA from
regulating CO2 emissions from existing fossil fuel electric generating units. Depending on the outcome of appeals and how any
final rules are ultimately implemented, the future cost of compliance may be substantial.
At the international level, the United Nations Framework Convention on Climate Change resulted in the Kyoto Protocol requiring
participating countries, which does not include the U.S., to reduce GHGs commencing in 2008 and has been extended through
2020. 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 of its 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 CWA and its amendments, apply to FirstEnergy's
plants. In addition, the states in which FirstEnergy operates have water quality standards applicable to FirstEnergy's operations.
The EPA finalized CWA Section 316(b) regulations in May 2014, requiring cooling water intake structures with an intake velocity
greater than 0.5 feet per second to reduce fish impingement when aquatic organisms are pinned against screens or other parts of
a cooling water intake system to a 12% annual average and requiring cooling water intake structures exceeding 125 million gallons
per day to conduct studies to determine site-specific controls, if any, to reduce entrainment, which occurs when aquatic life is drawn
into a facility's cooling water system. 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 cooling water intake channel to divert fish away from the
plant's cooling water intake system. Depending on the results of such studies and any final action taken by the states based on
those studies, the future costs of compliance with these standards may require material capital expenditures.
The EPA proposed updates to the waste water effluent limitations guidelines and standards for the Steam Electric Power Generating
category (40 CFR Part 423) in April 2013. The EPA proposed eight treatment options for waste water discharges from electric power
plants, of which four are "preferred" by the agency. The preferred options range from more stringent chemical and biological treatment
requirements to zero discharge requirements. The EPA is required to finalize this rulemaking by September 30, 2015, under a
consent decree entered by a U.S. District Court and the treatment obligations are proposed to phase-in as permits are renewed
on a 5-year cycle from 2017 to 2022. Depending on the content of the EPA's final rule and any final action taken by the states, the
future costs of compliance with these standards may require material capital expenditures.
In October 2009, the WVDEP issued an NPDES water discharge permit for the Fort Martin Plant, which imposes TDS, sulfate
concentrations and other effluent limitations for heavy metals, as well as temperature limitations. Concurrent with the issuance of
the Fort Martin NPDES permit, WVDEP also issued an administrative order setting deadlines for MP to meet certain of the effluent
limits that were effective immediately under the terms of the NPDES permit. MP appealed, and a stay of certain conditions of the
NPDES permit and order have been granted pending a final decision on the appeal and subject to WVDEP moving to dissolve the
stay. The Fort Martin NPDES permit could require an initial capital investment ranging from $150 million to $300 million in order to
install technology to meet the TDS and sulfate limits, which technology may also meet certain of the other effluent limits. Additional
technology may be needed to meet certain other limits in the Fort Martin NPDES 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.