OG&E 2012 Annual Report Download - page 39

Emission limitations for NOX focus on the emission rate to be
achieved (expressed in pounds of NOX per MMBtu of heat input). In
general, two options for compliance with the emission limitations are
provided: compliance with an individual emission rate for a boiler; or
averaging of emission rates over two or more units to meet an overall
emission rate limitation.
Since becoming subject to the Acid Rain Program, OG&E has met
all obligations and limitations requirements.
Climate Change and Greenhouse Gas Emissions
There is continuing discussion and evaluation of possible global climate
change in certain regulatory and legislative arenas. The focus is generally
on emissions of greenhouse gases, including carbon dioxide, sulfur hexa-
fluoride and methane, and whether these emissions are contributing to
the warming of the Earth’s atmosphere. There are various international
agreements that restrict greenhouse gas emissions, but none of them
have a binding effect on sources located in the United States. The U.S.
Congress has not passed legislation to reduce emissions of greenhouse
gases and the future prospects for any such legislation are uncertain,
but the EPA has existing authority under the Clean Air Act to regulate
greenhouse gas emissions from stationary sources. Several states have
passed laws, adopted regulations or undertaken regulatory initiatives to
reduce the emission of greenhouse gases, primarily through the planned
development of greenhouse gas emission inventories and/or regional
greenhouse gas cap and trade programs. Oklahoma, Arkansas and
Texas are not among them. If legislation or regulations are passed at the
Federal or state levels in the future requiring mandatory reductions of
carbon dioxide and other greenhouse gases on the Company’s facilities,
this could result in significant additional compliance costs that would
affect the Company’s future financial position, results of operations and
cash flows if such costs are not recovered through regulated rates.
Following from the Supreme Court’s interpretation of the Clean Air
Act’s applicability to greenhouse gases in Massachusetts v. EPA, the
EPA has proposed regulations for new power plants. In 2010, the EPA
also issued a final rule that makes certain existing sources subject to
permitting requirements for greenhouse gas emissions. This rule requires
sources that emit greater than 100,000 tons per year of greenhouse
gases to obtain a permit for those emissions, even if they are not other-
wise required to obtain a new or modified permit. Such sources that
undergo construction or modification may have to install best available
control technology to control greenhouse gas emissions. Although these
rules currently do not have a material impact on the Company’s existing
facilities, they ultimately could result in significant changes to the
Company’s operations, significant capital expenditures by the Company
and a significant increase in the Company’s cost of conducting business.
In 2009, the EPA adopted a comprehensive national system for
reporting emissions of carbon dioxide and other greenhouse gases
produced by major sources in the United States. The reporting require-
ments apply to large direct emitters of greenhouse gases with emissions
equal to or greater than a threshold of 25,000 metric tons per year,
which includes certain OG&E and Enogex facilities. OG&E also reports
quarterly its carbon dioxide emissions from generating units subject
to the Federal Acid Rain Program. OG&E and Enogex have submitted
the reports required by the applicable reporting rules.
The Company is continuing to review and evaluate available options
for reducing, avoiding, offsetting or sequestering its greenhouse gas
emissions. OG&E is a partner in the EPA Sulfur Hexafluoride Voluntary
Reduction Program. Enogex is a partner in the EPA Natural Gas STAR
Program, a voluntary program to reduce methane emissions.
The Company also seeks to utilize renewable energy sources that
do not emit greenhouse gases. OG&E’s service territory is in central
Oklahoma and borders one of the nation’s best wind resource areas.
The Company has leveraged its advantageous geographic position to
develop renewable energy resources and transmission to deliver the
renewable energy. The SPP has begun to authorize the construction of
transmission lines capable of bringing renewable energy out of the wind
resource area in western Oklahoma, the Texas Panhandle and western
Kansas to load centers by planning for more transmission to be built in
the area. In addition to significantly increasing overall system reliability,
these new transmission resources should provide greater access to
additional wind resources that are currently constrained due to existing
transmission delivery limitations.
Endangered Species
Certain Federal laws, including the Bald and Golden Eagle Protection
Act, the Migratory Bird Treaty Act and the Endangered Species Act,
provide special protection to certain designated species. These laws and
any state equivalents provide for significant civil and criminal penalties
for unpermitted activities that result in harm to or harassment of certain
protected animals and plants, including damage to their habitats. If such
species are located in an area in which the Company conducts operations,
or if additional species in those areas become subject to protection, the
Company’s operations and development projects, particularly transmis-
sion, wind or pipeline projects, could be restricted or delayed, or the
Company could be required to implement expensive mitigation measures.
The U.S. Fish and Wildlife Service announced a proposed rule to list the
lesser prairie chicken as threatened on November 30, 2012. A final deci-
sion regarding listing is anticipated to be completed by September 30,
2013. Although the lesser prairie chicken and its habitat are located in
potential development areas of the Company, the impact of a final deci-
sion to list this species as threatened cannot be determined at this time.
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