Emissions control rule could cost Southern Co. $18bn

Southern Co. (NYSE: SO) said proposed U.S. Environmental Protection Agency (EPA) rules could lead to it closing or switching generating fuel in up to 40 percent of the company's coal-fired generation. Southern said the capital cost to comply with the rules could be as much as $18 billion through 2020.

Southern President, Chairman and CEO Thomas A. Fanning included the evaluation in comments filed August 4 with the EPA on the proposed Utility MACT rule.

Southern said if the EPA's rule is implemented, 12,000 MW of coal-fired generation would need new emissions control equipment. He said another 4,000 MW of coal-fired generation would be retired and 1,500 MW of coal- and oil-fired generation would have to be replaced with natural gas.

Southern's analysis also said that through 2020, the estimated capital cost for the company's operating units to comply with all of the proposed rules for coal-fired generation would be between $13 billion and $18 billion.

Fanning said the three-year compliance timeframe for the Utility MACT rule is too short. He said projects to install sulfur dioxide emissions controls have ranged between 40 and 69 months. Projects to replace generation have averaged four to six years.

"The extremely compressed construction and outage schedules will needlessly drive up costs and threaten reliability," said Fanning. "The consequences of EPA's unreasonable timetable are significant to our customers and our nation."

Switching coal-fired generation to natural gas would also take at least four years because most interstate natural gas pipelines will need to be expanded. He said upgrades to transmission lines will also be necessary for reliability.

Fanning said extending the compliance timeframe to at least six years would achieve the same environmental results while protecting reliability and the economy.

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