Saturday, June 24, 2000

Cinergy must cut emissions

Rate hikes, brownouts ahead, utility says

By Amy Higgins
The Cincinnati Enquirer

        A court ruling allowing the federal government to enforce an air pollution reduction plan could cost Cinergy Corp. $700 million in capital expenditures and $10 million in annual costs — costs that the utility says eventually could come from Tristate consumers' pockets.

        A federal appeals court in Washington, D.C., late Thursday upheld the regulations allowing the U.S. Environmental Protection Agency to force more controls on Midwestern coal-burning power plants, which the EPA and some states claim create air pollution in the Northeast. Such regulation has been bitterly contested by Midwestern states that contend the impact of traveling pollution has been exaggerated and controls to curb it would cost too much.

        Steve Brash, a Cinergy spokesman, said the effect on the company's stockholders will depend on how the improvements are financed and what power rates are in the future.

        The cost of the new controls will likely hit Ohio con sumers after 2006, when rates will no longer be frozen by state regulation. Energy bills then will be at market rates; today's frozen rates in Ohio are at least 30 percent lower than in the Northeast, he said.

        Rate hikes could occur sooner for Kentucky and Indiana customers, Mr. Brash said.

        Another impact of the ruling could be Greater Cincinnatians' comfort next summer. Cinergy will have to shut down power plants during peak summer months to install pollution-control equipment to comply with the EPA's May 2003 deadline. And that may cause power shortages.

        “Utilities will not be able to avoid taking power plants out of service in the summer to do retrofits,” Mr. Brash said.

        Eleven of Cinergy's 36 power plants are slated to get selective catalytic production equipment, which is designed to reduce nitrogen oxide — a component of smog — from a smokestack's emissions.

        The ruling left EPA Administrator Carol Browner ecstatic. She called the decision from the U.S. Court of Appeals for the District of Columbia “a major environmental victory for everyone living throughout the eastern United States.”

        Ms. Browner said the regulation was intended to reduce smog-related illnesses, including bronchitis and childhood asthma.

        “It means that over a hundred million people will now breathe healthier air,” she said.

        Frank O'Donnell, executive director of the Washington-based environmental group Clean Air Trust, said the court decision “means that big, dirty, coal-fired electric power plants will have to clean up — and clean up pronto.”

        But Mr. Brash said the regulation had little to do with pollution and more to do with economic development. He said Northeast business leaders wanted to force an increase in Midwest energy prices to be more competitive luring new businesses to their region.

        “That's the Northeast's real goal,” he said.

        EPA proposed the rules in September 1998, after New York, Pennsylvania, Connecticut and Massachusetts said they couldn't meet clear-air standards because of long-range, interstate transport of pollutants.

        Midwestern utilities, state officials and coal interests sued in November 1998 to stop the rules from being implemented, saying emissions from their states do not pollute air in the East.

        The court decision came in response to a request for reconsideration of a March decision by a three-judge panel.

        Besides Ohio, Kentucky and Indiana, other states affected are: Alabama, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, North Carolina, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia and West Virginia.

        The Associated Press and Bloomberg News contributed.


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