Saturday, August 11, 2012

Hearing on EPA Impact on Your Electric Bill

Hearing on EPA Impact on Your Electric Bill
06:00 PM - 08:00 PM PST
Location: Cochise College Benson Center

Click Here To Respond To This Invitation

Dear Fellow Chamber Members and Friends:

The U.S. Environmental Protection Agency (EPA) has proposed regulations that could seriously impact you, your family, your businesses, the economic future of your community and everyone in the region. It’s why we’re reaching out to you in this way for the first time – because we need your help.

Please find time to attend an EPA hearing to be held the evening of August 15 in Benson. The details of the meeting are on the next page, but first here is a brief look at what the EPA proposes and why it could deal a crippling blow to our rural economies.

The EPA has said it may require Arizona Electric Power Cooperative (AEPCO) and the Apache Generating Station south of Willcox to install what’s called “selective catalytic reduction” (SCR) technology on the plant’s two coal-fired generators.

Why? Because of “regional haze.” Simply put, the EPA says SCR technology on the Apache Generating Station and at two other plants in the state owned by other companies would cut down on haze that theoretically impairs the view at the Grand Canyon and other national parks and wilderness areas.

But the cost to install SCR equipment at Apache Generating Station is mind-boggling – estimated at up to $218 million dollars. For a not-for-profit electric cooperative like AEPCO it represents a tremendous economic burden, one that would be passed to our distribution cooperative owners and the end-use consumer. It could add $27.7 million in annual operating expenses, which would translate to an 18-percent hike in wholesale power costs. That’s a minimum 12-percent increase in your electric bill. AEPCO operates on extremely narrow margins to begin with, and the yearly cost of this is almost 30 times AEPCO’s annual margins. Bottom line - it will dramatically impact the economic viability of Apache’s steam units and one or both could be shut down. AEPCO pays the largest property tax bill in Cochise County and that income to the county would be impacted. Jobs would be lost, not just at the plant but at businesses that support its operations. The ripple effect would be extensive and ongoing. Our rural economies, already reeling from the ongoing recession, would be permanently damaged.

And our position is that SCR technology is simply not necessary. AEPCO has, since 2007, been part of a dynamic and ongoing process to install “low NOx burner and Overfire Air” equipment on the units that would achieve the same result – at a fraction of the cost. Even the Arizona Department of Environmental Quality – a strict regulating agency – has said the technology we propose is more than adequate and that the EPA mandate would result in an “imperceptible” benefit.

Please read the talking points below and, based on what you read, decide how you feel this federal government agency’s overreaching mandate would impact you and your family and neighbors. Then attend the hearing and make your voice heard.

Thank you for your support.

Best regards,
Geoff Oldfather
Communications and Public Relations Manager
(520) 586-5465
(520) 444-3473 (cell)

Click here to respond to this invitation.

1. If implemented, what the ruling will require you to do?

If the Federal Implementation Plan (FIP) on Nitrogen Oxides (NOx) remains as proposed, Arizona Electric Power Cooperative, Inc. (AEPCO) would be required to install selective catalytic reduction (SCR), Low NOx Burner (LNB) and Overfire Air (OFA) on AEPCO’s Apache Generating Station ST2 and ST3, 195 MW (each) coal-fired generators located in Cochise, Arizona.

2. How much it will cost?

According to the EPA’s estimate, $88.6 million in capital cost and $12 million in annualized expense. Preliminary estimates by AEPCO indicate the costs could be significantly greater, perhaps double the EPA estimate. AEPCO is a “small entity” for regulatory purposes. The EPA conducted an initial assessment of the potential adverse impacts on AEPCO of requiring SCR with LNB and OFA. Using publicly available information, the EPA estimates, based on their costs, that the annualized cost of requiring SCR in ST2 and ST3 would likely be in the range of three percent of AEPCO’s assets and between six and seven percent of AEPCO’s annual sales. The projected annual costs of approximately $12 million exceed AEPCO’s net margins of $9.5 million in 2010 and $1.9 million in 2011.
The required investment would swamp AEPCO’s budget and limited financial resources. An $80 million investment in controls would increase AEPCO’s existing net plant investment by a third and would be roughly 42 times AEPCO’s 2011 margin.

3. What the cost to ratepayers might be?

The associated investment would necessitate a substantial long-term increase in AEPCO’s rates, and those rates would be borne by customer-members with relatively low incomes. The low-population-density areas of southeastern Arizona serviced by AEPCO present significant economic challenges.

4. Whether there is a risk of one or more units being shut down?

Yes. Given the financial impact of the proposed FIP, operation of these units may not be economically viable for our Member Distribution Cooperatives. The Apache Generating Station fleet includes two coal-fired steam units and five gas-fired generation units, which consist of four peaking units and a single steam unit. Apache Generating Station is the only generation plant owned and controlled by AEPCO.

5. If unit(s) are shut down, what the impact would be to neighboring communities/regions, including possible tax revenue loss?

Shutting down the units would result in the loss of a significant number of jobs with one of the largest employers in Southern Arizona. The economic impact of job loss alone would be devastating to hundreds of families living in an already economically depressed region of the State. Additionally, AEPCO pays approximately $2.4 million annually in property taxes to Cochise County.

6. Whether the higher NOx standard the EPA is demanding would have a visible impact on air quality?

Based on AEPCO and ADEQ’s analysis, no.

7. Whether the higher NOx standard would have an impact on public health?

Regional Haze is not a health-based standard.

8. What steps your utilities have already taken to reduce NOx emissions and how much it has cost?
AEPCO installed low NOx burners, overfire and underfire air modifications to ST2 in 1989 at a cost of $2 million.
AEPCO installed an upgraded version of low NOx burners, overfire, and underfire air modifications to Unit ST3 in 1993 for $2.7 million.
The EPA lowered the total NOx limits at Apache Generating Station again for January 1, 2008. AEPCO responded by installing upgraded low NOx burners and overfire air modifications in 2008 for the cost of $3 million.

Friday, August 10, 2012

Open House - Join Us Today

168 Est 4th Street
Benson, AZ

You are invited to our Open House
Friday August 10th @ 4:30 to 7:00PM

SAEDG & Benson/San Pedro Valley Chamber of Commerce
Board of Directors

About the REDLG Loan Program that funded our new building

Enjoy some refreshments!

Please RSVP with George @ 520-265-6058 or the Chamber @ 520-265-8031