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The Associated Press June 9, 2011, 4:50PM ET

AEP: New rules would lead to shutdowns, job cuts

American Electric Power Co. Inc. warned Thursday that it would have to shut down five plants and reduce operations at six others, at a cost of 600 jobs, to comply with new rules for coal-fired power plants proposed by the U.S. Environmental Protection Agency.

Strict regulations being considered by the EPA to limit emissions of mercury, lead and other toxins from coal-fired plants could take effect in 3 1/2 years, a timeline AEP called "unrealistic." In order to meet the rules in time, the company said, it would have to close plants in Ohio, West Virginia and Virginia by the end of 2014 and retire generating units at plants in five states as soon as by the end of 2012.

AEP said that while the need to install new emission-reducing equipment at its remaining plants would create some jobs, the company's compliance plan would mean a net loss of about 600 power plant positions that pay wages totaling some $40 million a year. The EPA proposal also would lead to higher electric rates, including increases of more than 35 percent for some businesses, the company said.

"The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling," said Michael G. Morris, AEP chairman and chief executive officer.

The EPA held public hearings in a few cities last month on the regulations, introduced in March in response to a court-ordered deadline. The agency has said it would cost nearly $11 billion a year for the industry to comply with the new rules.

But it also estimated that its plan would bring up to $140 billion in health benefits by 2016 and save 17,000 lives a year by reducing mercury emissions from power plants by 91 percent and further limiting other pollutants, including microscopic particles that can cause lung and heart problems.

Studies show exposure to mercury increases the risk of birth defects as well as developmental problems in small children. Mercury can become toxic after entering soil and water, and its effects are magnified as it moves up the food chain.

The court order gave the EPA until November to make the rules official. The agency said companies would then have three years to comply, and some could be given an extra year.

AEP said it hoped the EPA would come up with a more "reasonable" schedule.

"With more time and flexibility, we will get to the same level of emission reductions, but it will cost our customers less and will prevent premature job losses, extend the construction job benefits, and ensure the ongoing reliability of the electric system," Morris said in a statement.

Brendan Gilfillan, EPA press secretary, told The Associated Press in an email response that the agency's moves reflect common sense.

"These reasonable steps taken under the Clean Air Act will reduce harmful air pollution, including mercury, arsenic and other toxic pollution, and as a result protect our families, particularly children," Gilfillan said.

The plants AEP warned that it would close are in Lockbourne, Ohio; Glen Lyn, Va.; and Moundsville, Glasgow and New Haven, W.Va. The company said it would partially shut down plants in Conesville and Beverly, Ohio; Louisa, Ky.; Cleveland, Va.; Lawrenceburg, Ind.; and Pittsburg, Texas.

Columbus-based AEP is one of the nation's biggest power companies, with more than 5 million customers in 11 states.

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