Akins discusses EPA regulations during ‘In the Loop’ Bloomberg TV segment

Nick Akins, AEP president and chief executive officer, appeared April 4 on Bloomberg Television’s “In the Loop” show to discuss the impact potential Environmental Protection Agency regulations could have on the electric utility industry.

Nick Akins

When asked if he was concerned that EPA regulations could eventually put AEP’s plants out of business, Akins replied, “Yes, we are concerned because there has to be some degree of rationality in the transition that needs to take place when you retire this amount of generation. We’re already retiring 25 percent of the coal-fired generation (in AEP’s fleet) by the 2014-2015 time frame based on existing rules, so if we add more rules on top of it, it could have a dramatic impact on the rest of the generation we have, relative to our coal-fired fleet.”

Akins also noted that AEP has already spent a considerable amount of money cleaning up emissions from its coal-fired plants.

“We spent $7 billion over the last decade, putting on scrubbers — which remove SOx (sulfur dioxide), NOx (nitrogen oxide) and mercury — and those types of activities,” he said. “We also anticipate to spend another $4 billion-to-$5 billion based on the existing rules that we know today. 

“Also, the shale gas activities have entered the picture, and so decisions about new capital related to coal-fired facilities are being made in a very different framework than they were three or four years ago,” he added.

Akins told Bloomberg that AEP has responded to the influx of cheap natural gas by making some key generation decisions, and that more decisions may be necessary if new EPA regulations further change the landscape.

“We are repowering some of our units (with natural gas) and we’ve built some 5,000 megawatts of natural-gas-fired generation over the last few years, and you’re seeing that becoming more prevalent,” he explained. “So these rules (from the EPA) go hand-in-hand with decisions about capital because the more rules you have in place relative to EPA, the more hurdles you have to overcome when you are looking at scrubber and selective catalytic reduction device decisions on coal-fired generation versus entire replacement with natural gas.”

Akins reiterated that “rationality” is key for utilities as the EPA decides what rules and regulations it will impose on the industry down the road, especially given the continued sputtering economy.

“Hopefully, in this entire process, the EPA has seen the effect it could have on the economy, the effect it could have on the fleet of the U.S., and certainly those prices are an impact on lower and middle class customers that we have,” he concluded.