Environmental Regulations

John Amos Plant Ash Pond Closure

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The increasing scope and stringency of environmental regulations pose technical, operational and financial challenges for our industry. These challenges, including uncertainties with timing, scope and magnitude of future environmental regulations, influence our decisions to upgrade or retire generating units. They also affect the planning process for new generation projects across our industry.

AEP’s active participation in development of new regulations helps to ensure that new requirements are achievable, based on sound science, consistent with statutory authority, balanced with other rulemakings, weigh the cost of compliance for customers, and can be implemented in a rational time frame. Compliance is important to us, but we also have a responsibility to our investors who make the required capital investment and to our customers, who will ultimately pay for the implementation of compliance strategies while expecting reliable electric service.

Coal Combustion Residuals

The issue of coal ash disposal and handling came to the forefront nearly a decade ago and has since been subjected to a new federal rule covering the disposal and storage of coal combustion residuals (CCR).

AEP is committed to closing coal ash basins in a way that puts safety first while protecting the environment, minimizing impacts to the communities and managing our customers’ costs.

CCRs are the solid material left over after coal is burned to generate electricity. For decades, many state environmental agencies regulated landfills and surface impoundments where CCRs are placed. In 2015, the U.S. Environmental Protection Agency (EPA) established minimum federal rules for proper storage and disposal of these materials. These minimum requirements were designed to be self-implementing because the EPA lacked statutory authority to establish state permit programs.

On Dec. 16, 2016, bipartisan legislation was signed into law by President Obama, after passing both houses of Congress. The legislation provides a framework for states to develop and the EPA to approve permitting or other pre-approval programs for CCR facilities. State administration and enforcement and federal oversight can provide greater certainty and consistency in the implementation of these new requirements.

Since the rule became final, AEP put several programs in place to ensure compliance and established a new leadership role to oversee these efforts. AEP’s inspection and maintenance program for fly ash ponds and other impoundments remains vigorous and is continuously monitored.

AEP is in the midst of a multiyear plan to address the company’s use of coal ash basins. Currently, AEP has responsibility for several CCR ponds or pond complexes that are impacted under this rule. We have additional ponds exempt from this rule because they are located at power plants we retired in 2015, before the new federal rule went into effect. These ponds still will be regulated and ultimately closed, but under existing state programs. We have posted closure plans for all basins covered by the CCR Rule on our website.

AEP is committed to closing coal ash basins in a way that puts safety first while protecting the environment, minimizing impacts to the communities and managing our customers’ costs. AEP has a formal ash basin inspection program based on federal dam safety guidelines and applicable state dam safety regulations. We inspect all of our facilities based on requirements in the rule; in some cases, this includes groundwater monitoring systems. Annual engineering inspection reports and fugitive dust control plans for all of our coal-fueled power plants, as well as the notifications of closures, are available online at our dedicated CCR Rule Compliance site.

Beneficial Reuse

CCRs have long been used in concrete, wallboard and a wide variety of construction materials. While this benefits other industries, it also provides a source of financial and environmental benefits to AEP. In February 2014, the EPA completed a risk evaluation of the beneficial uses of coal fly ash in concrete and flue gas desulfurization (FGD) gypsum in wallboard and concluded with support for these beneficial uses. Currently, approximately 33 percent of the coal ash and other residual products from AEP’s generating facilities are used in the production of concrete and wallboard, as structural fill or soil additives, as abrasives or road treatment materials and for other beneficial uses. By diverting the coal ash to beneficial uses, we are minimizing our environmental impacts by reducing the need for waste disposal sites.

In 2016, AEP generated approximately 8.7 million tons of CCRs and was able to beneficially use more than 2.8 million tons, or 33 percent of the total. Beneficial use of CCRs (considered to be products if they are beneficially used), avoided approximately $33 million in disposal costs in 2016 and generated more than $7.9 million in revenues.

For a complete regulations update, please see AEP’s Form 10K under Environmental Issues.