American Electric Power Perspective on Water Quality Trading

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American Electric Power Perspective on Water Quality Trading

  1. 1. Tim Lohner, Ph.D. American Electric Power
  2. 2. American Electric Power  Serves 5.3 million customers in 11 states  Over 37,400 MW generating capacity, 87% utilizing fossil fuels  Nation’s largest transmission system–39,000 mi. American Electric Power
  3. 3. Lake Erie Ohio River
  4. 4. Power Plant Nutrient Sources  Nitrogen Emissions  SCRs/SNCR Installations  Haze Mitigation  Scrubber Installations  Chilled ammonia carbon capture
  5. 5. 0 10 20 30 40 50 60 3/5/2009 3/25/2009 4/17/2009 5/7/2009 O hio R iver Chlorophyll(ug/L)
  6. 6. Regulatory Requirements  NPDES Permit Limits  Nutrient-based TMDLs  Antidegradation Reviews  New Steam Electric Effluent Guidelines
  7. 7. Limited Expensive Treatment Options
  8. 8. Ohio River Basin Water Quality Trading Project  Innovative, market-based, voluntary program.  First interstate program of its kind.  Leading practice in the watershed.  Wide collaboration and input from regulatory and environmental organizations.
  9. 9. Compliance Cost Options Conventional Costs Trading Costs $52 million DFA conversion $3 to $7 million DFA O&M $100 thousand per year $15 to $165 per pound $2 to $8 per pound
  10. 10. Cost Savings With Trading Concentration Limits - Based on Actual Flows 8 mg/L TN 5 mg/L TN Facility Unit Cost Pounds Reduced Potential Annual Savings Unit Cost Pounds Reduced Potential Annual Savings TN ($/pound) TN TN ($/pound) TN Base Case $ 13.84 603,989 $352,724.76 $14.41 64,969 $416,184.07 1. Plant #2 N/A 0.0 N/A 0.0 2. Plant #1A N/A 0.0 $ 163.98 5,708 $890,273.09 3. Plant #3 $ 59.60 14,025 $723,714.61 $ 56.75 16,493 $803,991.11 4. Plant #4 N/A 0.0 N/A 0.0 5. Plant #1E N/A 0.0 N/A 0.0 8. Plant #1B N/A 0.0 $ 33.75 27,730 $714,089.78 9. Plant #1C N/A 0.0 $ 57.83 16,183 $806,464.95 Resulting Demand for Credits 74,424 Credits 131,083 Credits
  11. 11.  Achieve compliance  Save money  Environmental Stewardship and Sustainability  Improved public relations  Credit Stacking Advantages of Trading
  12. 12. Added Benefits to AEP  Future authorization to trade  First access to credit pool  Reduced trading ratios  Extended compliance schedules  Greenhouse Gas credits Particularly pilot trades:
  13. 13. Greenhouse Gas Credits EPRI PID# 1013128 A. Diamant, Project Manager  Nitrous oxide is a powerful GHG.  One ton of N2O is equivalent to 296 tons of CO2.
  14. 14. Accelerating Application to Other Watersheds  Precedent for cooperation among regulators and industry.  Regulatory drivers and incentives.  Manage liabilities.  Validation of results.  Removal of regulatory barriers.
  15. 15.  Draft rule issued June 7, 2013.  Nitrate/nitrite limits on FGD WW.  0.17 mg/L max  0.13 mg/L avg  Forces biological treatment.  Limits must be met before commingling or discharge.  Capital costs - $14 to $47 million.  O&M costs - $250K to $750K. Removal of Regulatory Barriers EPA Proposed Effluent Guidelines:
  16. 16. QUESTIONS? Tim Lohner, Ph.D. Consulting Environmental Specialist Water & Ecological Resource Services 614.716.1255 twlohner@aep.com American Electric Power 1 Riverside Plaza Columbus, Ohio 614.716.1000 aep.com

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