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Nov. 2 — Standards to regulate toxic discharges from power plants will cost more to implement than the Environmental Protection Agency has estimated and will especially burden small and medium facilities, attorneys and consultants told Bloomberg BNA.
The EPA's annual average industrywide cost estimate of about $480 million to comply with the effluent limitation guidelines and standards for the steam electric power generating industry was dismissed as too low, particularly by the National Rural Electric Cooperative Association, whose members consist of small- to medium-sized power plants. These facilities can ill-afford to install controls to meet all the air and water regulations that the EPA has imposed, Dorothy Kellogg, NRECA senior principal on environmental policy, said.
Kellogg was referring to regulations to limit greenhouse gases, mercury, oxides of nitrogen and sulfur, and design changes in cooling water intake systems and management of coal ash.
“Every direct discharge into the waters of the U.S. has to have a permit,” she said. “The difference is whether the permit is based on effluent limits that consider input from very, very large power plants owned and operated by companies that have a lot of financial resources at their disposal.”
The rule applies largely to coal-fired steam electric power plants of 50 megawatts or more.
“While the EPA says the rule applies to over 1,000 coal-fired power plants, the real effect is on those coal-fired plants that generate the waste streams that this rule has identified for regulation,” said Harold Blinderman, partner with Hartford, Conn.-based Day Pitney LLP.
Blinderman said the final power plant effluent guidelines (RIN 2040-AF14) will require owners and operators of coal-fired power plants to invest significant capital into building and designing pollution controls and associated infrastructure for each plant to comply with the rule.
In its proposed rule, the agency estimated that about 500 coal-fired power plants would be affected by the rulemaking, a figure that more than doubled in the final version.
When the Clean Air Act was reauthorized in 1990 and required power plants to install technologies for scrubbing out harmful pollutants, these facilities have had to grapple with how to manage the resulting waste, whether it's coal ash or wastewater. The effluent limitation guidelines, or ELGs, attempt to reduce the amount of pollutants that have been transferred from air pollution technologies to the wastewater. Discharges of toxic metals, nutrients and other pollutants are expected to be cut by 1.4 billion pounds, the EPA said.
Jim Wedeking, staff attorney with the Washington D.C.-office of Sidley Austin LLP, said the power industry in general is displeased with the rule, because it has “underpriced” the cost of compliance.
Both Wedeking and Blinderman expect the agency will be sued over the rule once it is published mainly on grounds of underestimating compliance costs.
“I think the argument will be made that the EPA hasn't fully considered the cost of compliance with technologies it has included in the rule, and also hasn't fully considered the impacts of complying with other rules,” Blinderman said.
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The capital cost alone of installing biological treatment systems—used to remove nitrates and selenium from scrubber, or flue gas desulfurization, wastewater—at a single plant that may contain a variety of electricity generating units can range from $10 million to $60 million, according to Kansas City-based Burns & McDonnell, an engineering consulting firm.
However, the EPA claims in the rule that affordable technologies are available and already in place at some plants, which are capable of reducing or eliminating steam electric power plant discharges.
The final effluent guidelines require power plants to use a suite of controls to manage discharges of arsenic, selenium, nitrates, mercury, zinc and other pollutants from power plants. Among those controls are chemical and biological technologies to treat wastewater generated by wet scrubbers, units to curb sulfur oxide emissions from burning coal. The rule also requires that power plants owners and operators use dry handling of fly ash and bottom ash in order to eliminate the potential for pollution from the wastewater containing either form of ash (2015 WLPM, 10/8/15).
The rule has identified for regulation wastewater associated with flue gas desulfurization, fly ash, bottom ash, flue gas mercury control, combustion residual leachate from landfills and surface impoundments, nonchemical metal cleaning wastes and gasification of fuels such as coal and petroleum coke.
Most of these wastestreams are associated with coal-fired power plants, according to Diane Martini, senior water and wastewater consultant with the Chicago office of Burns & McDonnell, who agreed with Blinderman that the largest impact of the rule would be on coal-fired power plants.
The EPA has affirmed that natural gas and nuclear power plants typically discharge cooling water as well as nonchemical metal cleaning wastes, whereas the majority of the waste streams associated with the rulemaking are generated by power plants using coal and petroleum-coke (2013 WLPM, 8/21/13).
Kellogg of NRECA said the association was disappointed that the rule relies on numeric limits based on the workings of a large, model power plant rather than allowing permit writers to use their best professional judgment and work with utilities and state regulators to hammer out the treatment technology best suited to a particular facility.
However, the agency concluded state and local permitting authorities would face an “unnecessary burden” to conduct a complex technical analysis that they may not have the resources or expertise to complete.
Of the 1,080 power plants, about 12 percent steam electric power plants and 28 percent of coal-fired or petroleum coke-fired power plants will incur some compliance costs. The EPA has estimated average compliance costs that factor in operations and maintenance costs as well as capital costs to install the controls at $480 million.
Specifically, the EPA estimated that variable production costs at steam electric power plants increase by approximately 0.3 percent, or 10 cents per megawatt-hour at the national level. The resulting net change in total capacity for steam electric power plants also is very small, according to the EPA. For the group of steam electric power plants, total capacity will decrease by 843 megawatts or approximately 0.2 percent of the 359,982 MW baseline capacity, corresponding to a net closure of two units.
The two main revisions to the final effluent guidelines from the proposal lie in requiring the power plants to use dry handling for bottom ash and using chemical precipitation processes followed by biological treatment to treat scrubber wastewater.
The EPA's surveys show that nearly half of the power plants use wet scrubber systems that discharge wastewater containing arsenic, mercury, selenium and nitrates for which the rule has set effluent limits. Moreover, the EPA said currently only six power plants nationwide use biological treatment to treat scrubber wastewater to remove nitrates and selenium, while about 39 use some form of chemical precipitation to treat this wastewater, as warranted by the revised effluent guidelines.
According to Sara Burgin, partner in the Austin office of Bracewell & Giuiliani LLP, the size of a facility required to treat wastewater generated from scrubber operations will depend on the size and the generating capacity of the power plan.
Martini of Burns & McDonnell provided ballpark costs of converting wet bottom ash for dry handling, and installing physical and chemical precipitation methods, followed by biological treatment systems for managing wastewater. She said the estimates, though broad, range from $30 million to $300 million.
“Each plant is unique, and the range of potential costs is very broad,” Martini said. “Some may have already converted to dry bottom ash, and may already have installed FGD wastewater treatment, so would only need to add biological treatment or another technology to polish the wastewater.”
• bottom ash conversion: $10 million to $50 million;
• scrubber wastewater (physical and chemical precipitation): $10 million to $60 million;
• scrubber wastewater (Biological): $10 million to $60 million.
Martini said the costs of converting bottom ash for dry handling do not include the costs of closing ash ponds. Those costs could run an additional tens of millions of dollars.
Aside from installation costs, there is the question of land that is needed to build these treatment facilities. Burgin said power plants will have to build wastewater treatment plants spanning an acre or two to treat scrubber wastewaters.
The power industry is concerned, particularly Kellogg of NRECA, that the biological treatment is “unnecessary” because physical and chemical treatment take care of 90 percent of the pollutants in the wastewater. The vast majority of NRECA members generate less than 500 MW in power. For them, this cost is more than its membership can bear.
“It seems to me that an awful lot of money is being paid for every pound of treatment by people with a lot more economic challenges than you and I have, and these costs can't be spread across investors, but have been borne by our members,” Kellogg said.
Kellogg also is concerned that the EPA required biological treatment after modeling results from a large Duke Energy power plant that was providing baseload power. Biological treatment involves feeding bugs in large vats with wastewater that has been stripped off pollutants and grit by physical separation and chemical precipitation. “These bugs are kind of picky. They require the same feed coming at them at the same rate,” Kellogg said.
As more and more coal-fired power plants are used as peaking plants, or plants that only generate power when needed at peak times as opposed to running constantly, Kellogg said, the population of bugs dies out and has to be replenished.
Martini agreed that the variability of wastewater discharged to biological treatment systems is an operational concern, because there could be malfunctions and outages or changes in coal blends as a result of the greenhouse gas or other air rules. It could also be a compliance risk, a result of toxic discharges that go untreated.
The EPA has offered voluntary incentives to industry to delay compliance until the end of 2023 in exchange for using thermal evaporation of scrubber wastewater that would do away with liquid discharge, but the price tag on it is expensive and could range from $10 million to $100 million, according to Martini.
The power sector has between 2018 and 2023 to comply with the effluent limits that will be incorporated into their National Pollutant Discharge Elimination System permits. The coal combustion residual rule takes effect Oct. 15, but the deadlines for compliance follow closure of ash ponds and landfills that is bound to happen when power plants switch to dry handling of both fly and bottom ash.
None of those contacted by Bloomberg BNA disputed that the EPA tried to coordinate compliance of the effluent guidelines with the coal combustion residual rule.
Given how the compliance dates of air and water rules affecting power plants are overlapping and converging, Martini said, “only time will tell.”
“Running a coal-fired power plant has become more complicated than it used to be because the operator has to consider additional factors beyond Btus and cost. They have to consider compliance with air and water rules too,” Martini said.
There are a limited number of vendors that can provide equipment for ash handling and wastewater treatment, and those systems don't get built overnight, she added.
“It will be interesting to see how that plays whether everyone can get everything built within the time frame allowed,” she said.
Despite the EPA's claims that the impact will be negligible, Martini said utility owners will make decisions on an individual plant basis, whether it is cost-effective to convert to natural gas or to close them or to comply with all the rules.
From the cooperatives perspective, Kellogg said compliance with all environmental rules coming into effect will be a challenge. “They are all hitting at once,” she said.
Burgin, of Bracewell & Giuliani, said the power industry is currently grappling with the air regulations.
“They aren't even focused on the costs of the revised effluent guidelines, but this rule is one more burden on an already overburdened group,” Burgin said.
According to Blinderman, absent a stay from a court, “the industry will have to deal with the rule.”
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