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Released February 15, 2017 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Northern Indiana Public Service Company (NIPSCO) (Merrillville, Indiana), an electric utility unit of NiSource Incorporated (NYSE:NI) (Merrillville), plans to invest about $399 million to comply with two federal environmental regulations: the coal combustion residuals rule (CCR) and the effluent limitations guidelines (ELG) rule.
Over the next few years, NIPSCO is going to have a lot of company. The ELG and CCR rules have been finalized, but they have different effective dates: The ELG rule is effective in late 2018, while the CCR rule became effective in late 2015. Across the nation, the electric utility industry is expected to make hefty investments--as much as billions of dollars per year--to comply with each rule.
In the near term, there appears to be little the Trump administration can do to reverse these two rules, which were finalized during the Obama administration. Reversing a finalized federal rule is an arduous process that could take as long as it took to write the original rule.
However, while coal-burning utilities appear to have accepted the finality of the CCR and ELG rules, the Trump administrations may offer utilities the potential to avoid potentially huge outlays to comply with the Clean Power Plan (CPP), which is being litigated in the federal courts. The U.S. Court of Appeals for the D.C. Circuit is expected to render its decision on the CPP in the near future, and an appeal of that decision to the U.S. Supreme Court is widely expected.
As a candidate, Trump railed against the CPP as one of President Obama's "job-killing regulations." The CPP aims to reduce U.S. power plant emissions of carbon dioxide by about 32%, roughly 870 million metric tons, by 2030 compared to a 2005 baseline. For more on the CPP, see August 5, 2015, article - Obama Unveils Final Clean Power Plan, But Will it Survive Court Challenge?.
The ELG rule was finalized September 30, 2015, by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) under its authority in the federal Clean Water Act. Prior to 2015, effluent standards had not been updated since 1982. Over a five-year period starting November 2018, the rule requires as many as 1,100 U.S. steam electric generators to comply with new limits on the amount of toxic metals and other harmful pollutants that can be discharged in their wastewater stream. These materials include byproducts of a power plant's wet flue gas desulfurization (FGD) units, as well as other harmful plant discharges like arsenic, lead, mercury, selenium, chromium and cadmium.
Enforcement of these new standards will be through each power plant's National Pollutant Discharge Elimination System (NPDES) permits, which must be renewed every five years. The EPA estimated the rule would reduce the amount of toxic metals, nutrients and other pollutants that steam electric power plants are allowed to discharge by 1.4 billion pounds per year. For more on this rule, see October 22, 2014, article - U.S. Power Industry's Regulatory Future, Part Two: EPA Proposes New Effluent Limitations Guidelines, and December 22, 2015, article - EPA Releases 2015 Power Plant Effluent Guidelines.
Coal combustion residuals (CCRs) is the term for a broad range of by-products resulting from the combustion of coal, including fly ash, bottom ash, boiler slag and flue gas desulfurization (FGD) materials. The EPA said CCRs are one of the largest industrial waste streams generated in the U.S. In 2012, more than 470 coal-fired electric utilities burned more than 800 million tons of coal, generating approximately 110 million tons of CCRs in 47 states and Puerto Rico, the agency estimated.
The 200-page CCR rule, enacted by the EPA under its authority in the Resource Conservation and Recovery Act, became effective in October 2015. The law requires utilities to eventually close all wet-ash ponds and move all dry-ash materials to landfills. The CCR rule will affect hundreds of facilities across the U.S. For more on the CCR rule, see October 21, 2014, article - U.S. Power Industry's Regulatory Future, Part One: Clean Power Plan, Coal Combustion Residuals Stir Legal Fights.
The EPA estimated annual compliance costs for the CCR rule at $735 million. Annual benefits were estimated at about $294 million, meaning the rule's costs will be more than twice its projected financial benefits, though some benefits, like reduced community fear that a coal ash pond will fail, were hard to quantify, EPA said. In late 2008, the failure of a TVA coal-ash facility at its Kingston Fossil Plant triggered a national outcry on the storage of CCRs that spurred regulatory action.
While separate, the ELG and CCR rules also intersect, explained Brock Ramey, Industrial Info's North American Power specialist. He predicted significant project spending--perhaps as much as $5 billion to $6 billion annually for a period of several years--to comply with each rule.
"Utilities are just starting to assess their compliance options and costs," Ramey said in an interview. "We're seeing ELG compliance plans ranging from $23 million to $200 million per facility. It's extremely dynamic right now."
More than a few utilities are still updating their compliance plans, he continued. "Some landfills say they'll close in 2040, when the power plants that produce the coal ash close. And some states are moving aggressively, more aggressively than utilities would prefer, to close ash landfills. We're going to see a lot of compliance planning and project activity over the next five years."
"I expect to see ELG- and CCR-related project spending to begin in earnest this year, and really ramp up over 2017-2020. There will be a lot of business created for environmental compliance firms by these two rules." Industrial Info plans to more deeply investigate compliance options for these two rules in a forthcoming series of articles.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Over the next few years, NIPSCO is going to have a lot of company. The ELG and CCR rules have been finalized, but they have different effective dates: The ELG rule is effective in late 2018, while the CCR rule became effective in late 2015. Across the nation, the electric utility industry is expected to make hefty investments--as much as billions of dollars per year--to comply with each rule.
In the near term, there appears to be little the Trump administration can do to reverse these two rules, which were finalized during the Obama administration. Reversing a finalized federal rule is an arduous process that could take as long as it took to write the original rule.
However, while coal-burning utilities appear to have accepted the finality of the CCR and ELG rules, the Trump administrations may offer utilities the potential to avoid potentially huge outlays to comply with the Clean Power Plan (CPP), which is being litigated in the federal courts. The U.S. Court of Appeals for the D.C. Circuit is expected to render its decision on the CPP in the near future, and an appeal of that decision to the U.S. Supreme Court is widely expected.
As a candidate, Trump railed against the CPP as one of President Obama's "job-killing regulations." The CPP aims to reduce U.S. power plant emissions of carbon dioxide by about 32%, roughly 870 million metric tons, by 2030 compared to a 2005 baseline. For more on the CPP, see August 5, 2015, article - Obama Unveils Final Clean Power Plan, But Will it Survive Court Challenge?.
The ELG rule was finalized September 30, 2015, by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) under its authority in the federal Clean Water Act. Prior to 2015, effluent standards had not been updated since 1982. Over a five-year period starting November 2018, the rule requires as many as 1,100 U.S. steam electric generators to comply with new limits on the amount of toxic metals and other harmful pollutants that can be discharged in their wastewater stream. These materials include byproducts of a power plant's wet flue gas desulfurization (FGD) units, as well as other harmful plant discharges like arsenic, lead, mercury, selenium, chromium and cadmium.
Enforcement of these new standards will be through each power plant's National Pollutant Discharge Elimination System (NPDES) permits, which must be renewed every five years. The EPA estimated the rule would reduce the amount of toxic metals, nutrients and other pollutants that steam electric power plants are allowed to discharge by 1.4 billion pounds per year. For more on this rule, see October 22, 2014, article - U.S. Power Industry's Regulatory Future, Part Two: EPA Proposes New Effluent Limitations Guidelines, and December 22, 2015, article - EPA Releases 2015 Power Plant Effluent Guidelines.
Coal combustion residuals (CCRs) is the term for a broad range of by-products resulting from the combustion of coal, including fly ash, bottom ash, boiler slag and flue gas desulfurization (FGD) materials. The EPA said CCRs are one of the largest industrial waste streams generated in the U.S. In 2012, more than 470 coal-fired electric utilities burned more than 800 million tons of coal, generating approximately 110 million tons of CCRs in 47 states and Puerto Rico, the agency estimated.
The 200-page CCR rule, enacted by the EPA under its authority in the Resource Conservation and Recovery Act, became effective in October 2015. The law requires utilities to eventually close all wet-ash ponds and move all dry-ash materials to landfills. The CCR rule will affect hundreds of facilities across the U.S. For more on the CCR rule, see October 21, 2014, article - U.S. Power Industry's Regulatory Future, Part One: Clean Power Plan, Coal Combustion Residuals Stir Legal Fights.
The EPA estimated annual compliance costs for the CCR rule at $735 million. Annual benefits were estimated at about $294 million, meaning the rule's costs will be more than twice its projected financial benefits, though some benefits, like reduced community fear that a coal ash pond will fail, were hard to quantify, EPA said. In late 2008, the failure of a TVA coal-ash facility at its Kingston Fossil Plant triggered a national outcry on the storage of CCRs that spurred regulatory action.
While separate, the ELG and CCR rules also intersect, explained Brock Ramey, Industrial Info's North American Power specialist. He predicted significant project spending--perhaps as much as $5 billion to $6 billion annually for a period of several years--to comply with each rule.
"Utilities are just starting to assess their compliance options and costs," Ramey said in an interview. "We're seeing ELG compliance plans ranging from $23 million to $200 million per facility. It's extremely dynamic right now."
More than a few utilities are still updating their compliance plans, he continued. "Some landfills say they'll close in 2040, when the power plants that produce the coal ash close. And some states are moving aggressively, more aggressively than utilities would prefer, to close ash landfills. We're going to see a lot of compliance planning and project activity over the next five years."
"I expect to see ELG- and CCR-related project spending to begin in earnest this year, and really ramp up over 2017-2020. There will be a lot of business created for environmental compliance firms by these two rules." Industrial Info plans to more deeply investigate compliance options for these two rules in a forthcoming series of articles.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
