Progress Energy 2008 Annual Report Download - page 47

Progress Energy Annual Report 2008
45
$1.0 billion to comply with the CAVR at PEF related primarily
to installation of control equipment at CR1 and CR2, which
we subsequently have decided to retire as coal-fired units.
The timing and extent of the costs for future projects will
depend upon final compliance strategies.
To date, under the first phase of Clean Smokestacks
Act emission reductions, all environmental compliance
projects at PEC’s Asheville, Lee and Roxboro plants have
been placed in service. The remaining first-phase project
at one of PEC’s largest plants, Mayo, is under construction
and is expected to be completed in 2009. The remaining
projects to comply with the second phase of emission
reductions, which are smaller in scope, have not yet
begun. These estimates are conceptual in nature and
subject to change. In 2008, PEC determined that its in-
process CAIR project did not yield the desired compliance
results and decided not to pursue completion of the
project. Additional compliance projects requiring material
environmental compliance costs may be implemented in
the future.
To date, expenditures at PEF for CAIR regulation
primarily relate to environmental compliance projects
under construction at CR5 and CR4, which are expected
to be placed in service in 2009 and 2010, respectively.
As a result of changes in the scope of work related to
estimation of costs for compliance with the CAIR and the
uncertainty regarding the EPA’s further CAIR proceedings,
the delisting determination and the CAMR discussed
above, PEF is currently unable to estimate certain costs
of compliance. However, PEF believes that future costs
to comply with new or subsequent rule interpretations
could be significant. Compliance plans and estimated
costs to meet the requirements of new regulations will be
determined when those new regulations are finalized.
In March 2004, the North Carolina attorney general filed a
petition with the EPA, under Section 126 of the Clean Air
Act, asking the federal government to force coal-fired
power plants in 13 other states, including South Carolina,
to reduce their NOx and SO
2
emissions. The state of North
Carolina contends these out-of-state emissions interfere
with North Carolina’s ability to meet national air quality
standards for ozone and particulate matter. On March 16,
2006, the EPA issued a final response denying the petition.
The EPA’s rationale for denial was that compliance with
the CAIR would reduce the emissions from surrounding
states sufficiently to address North Carolina’s concerns.
On June 26, 2006, the North Carolina attorney general filed
a petition in the D.C. Court of Appeals seeking a review
of the agency’s denial of the Section 126 petition; that
appeal was held in abeyance pending resolution of the
appeal of the CAIR then pending before the same court.
On July 11, 2008, the D.C. Court of Appeals vacated the
CAIR. On December 23, 2008, the D.C. Court of Appeals
remanded the CAIR, without vacating the rule, for the
EPA to conduct further proceedings consistent with
the D.C. Court of Appeals’ prior opinion. On the basis of
these developments, the appeal of EPA’s denial of North
Carolina’s Section 126 petition was resumed and briefing
on the merits has been completed. Oral argument is
scheduled for March 12, 2009. The outcome of this matter
cannot be predicted.
Air and Water Quality Estimated Required
Environmental Expenditures (in millions) Estimated Timetable Total Estimated Expenditures Cumulative Spent
through December 31, 2008
Clean Smokestacks Act 2002–2013 $1,500–1,600 $1,007
In-process CAIR projects(a) 2005–2010 1,200 847
CAVR(b) –2017 – –
Mercury regulation(c) 2006–2017 – 5
Total air quality 2,700–2,800 1,859
Clean Water Act Section 316(b)(d) – –
Total air and water quality $2,700–2,800 $1,859
(a)
We are continuing construction of our in-process emission control projects. Additional compliance plans to meet the requirements of a revised rule will be
determined upon finalization of the rule. See discussion under “Clean Air Interstate Rule.”
(b)
As a result of the decision remanding the CAIR, compliance plans and costs to meet the requirements of the CAVR are being reassessed. See discussion
under “Clean Air Visibility Rule.”
(c)
Compliance plans to meet the requirements of a revised or new implementing rule will be determined upon finalization of the rule. See discussion under
“Clean Air Mercury Rule.”
(d)
Compliance plans to meet the requirements of a revised or new implementing rule under Section 316(b) of the Clean Water Act will be determined upon
finalization of the rule. See discussion under “Water Quality.”
North Carolina Attorney General Petition under Section
126 of the Clean Air Act