EPA rules may cost CU $200 million
Two hundred million dollars.
That’s how much City Utilities might have to pay to meet new EPA regulations in the next few years, according to CU staff.
The potential regulatory cost overshadowed a discussion of CU’s proposed $528.8 million 2012 budget Tuesday as the board wrestled with how to limit the impact on CU customers.
CU staff believes the Environmental Protection Agency will force utilities to reduce ozone, sulfur dioxide, nitrogen dioxide and fine particulate emissions from power plants within the next five years.
Coal-fired power plants also likely will have to meet new regulations for containing coal ash left over after coal is burned.
CU General Manager Scott Miller told the board that “these are real risks for us.”
“And there’s no money from the federal government to help us implement any of this?” asked CU board member Krystal McCulloch.
No, according to Steve Stodden, CU’s manager of electric supply.
Stodden said CU hired the engineering consulting firm Burns and McDonnell to analyze how the coming EPA rules will affect CU and determine what equipment the utility will need to install to meet the requirements.
But the other coal unit at the facility, as well as the coal-fired James River Power Station, likely will need costly emission controls.
Board Chairman Patrick Platter said the utility should consider setting money aside ahead of the rules.
But board member Tom Finnie noted that CU has been criticized in the past for carrying a large reserve fund.
He and board member Lisa Officer said CU should pass those regulatory costs straight through to CU customers because it’s a mandate from the federal government.
Finnie said the CU board needs to emphasize the significance of the coming EPA regulations to the Springfield City Council, which is tasked by the City Charter to approve the CU budget.
The council and CU board will have a joint study session and public hearing on the utility’s budget on Aug. 16.
The $528.8 million budget is $13 million larger than the current budget.
It includes a 3 percent electric rate increase and 8 percent water increase that take effect in October — the start of CU’s 2012 budget year. Both were previously approved by the City Council.
Major projects include construction of a new bus transfer station, purchase of larger transit buses and an ongoing expansion of the transit fleet maintenance center on North Boonville Avenue.
CU plans to buy a new water pump for its Stockton Lake pumping facility and begin constructing a 1.5 million gallon water tower to improve water pressure in southeast Springfield.
Once EPA issues the rules, Stodden said CU would have three years to comply.
“We’re hoping $200 million is the top end of what it could cost us,” Stodden said. “But that number is not beyond the realm of possibility.”
Miller said once the rules do go into effect, there will be a “construction rush” as utilities across the country scramble to get contracts for environmental equipment.
“We need to try to get ahead of the construction rush,” Miller said. “My charge to Steve and his staff is don’t get me anywhere near that $200 million figure. We’ve got to find ways to do this better, more efficiently and at less cost” to reduce the impact on Springfield and CU customers.
Miller emphasized that the newly operational John Twitty Energy Center 2 power plant was built to meet or exceed all the new emission rules coming from the EPA.
Aside from possible costs to improve CU’s coal ash landfill sites, Miller said JTEC2 likely wouldn’t be affected by the new EPA rules.
-Wes Johnson
