American Electric Power (AEP) is an electric utility serving 5.3 million customers across 11 states. It has over 37,400 MW of generating capacity, with 87% from fossil fuels. AEP operates the largest transmission system in the US at 39,000 miles. The presentation discusses AEP's efforts to comply with regulations on nutrient discharges from its power plants into waterways like the Ohio River. It proposes an innovative water quality trading program that would allow AEP plants to purchase nutrient discharge credits from other sources, saving money compared to traditional compliance options. Estimates show the trading program could save AEP over $350,000 to $890,000 annually depending on the nutrient limits. The presentation argues the program could

1. Tim Lohner, Ph.D.
American Electric Power

2. American Electric Power
 Serves 5.3 million customers in 11 states
 Over 37,400 MW generating capacity, 87%
utilizing fossil fuels
 Nation’s largest transmission system–39,000 mi.
American Electric Power

3. Lake Erie
Ohio River

4. Power Plant Nutrient Sources
 Nitrogen Emissions
 SCRs/SNCR Installations
 Haze Mitigation
 Scrubber Installations
 Chilled ammonia carbon capture

5. 0
10
20
30
40
50
60
3/5/2009
3/25/2009
4/17/2009
5/7/2009
O
hio
R
iver
Chlorophyll(ug/L)

6. Regulatory Requirements
 NPDES Permit Limits
 Nutrient-based TMDLs
 Antidegradation Reviews
 New Steam Electric Effluent
Guidelines

7. Limited Expensive
Treatment Options

8. Ohio River Basin Water Quality
Trading Project
 Innovative, market-based,
voluntary program.
 First interstate program of its kind.
 Leading practice in the watershed.
 Wide collaboration and input from
regulatory and environmental
organizations.

10. Compliance Cost Options
Conventional Costs Trading Costs
$52 million DFA conversion
$3 to $7 million DFA O&M
$100 thousand per year
$15 to $165 per pound $2 to $8 per pound

11. Cost Savings With Trading
Concentration Limits - Based on Actual Flows
8 mg/L TN 5 mg/L TN
Facility
Unit Cost
Pounds
Reduced
Potential
Annual
Savings
Unit Cost
Pounds
Reduced
Potential
Annual
Savings
TN ($/pound) TN TN ($/pound) TN
Base Case $ 13.84 603,989 $352,724.76 $14.41 64,969 $416,184.07
1. Plant #2 N/A 0.0 N/A 0.0
2. Plant #1A N/A 0.0 $ 163.98 5,708 $890,273.09
3. Plant #3 $ 59.60 14,025 $723,714.61 $ 56.75 16,493 $803,991.11
4. Plant #4 N/A 0.0 N/A 0.0
5. Plant #1E N/A 0.0 N/A 0.0
8. Plant #1B N/A 0.0 $ 33.75 27,730 $714,089.78
9. Plant #1C N/A 0.0 $ 57.83 16,183 $806,464.95
Resulting Demand for
Credits
74,424 Credits 131,083 Credits

12.  Achieve compliance
 Save money
 Environmental Stewardship and
Sustainability
 Improved public relations
 Credit Stacking
Advantages of Trading

13. Added Benefits to AEP
 Future authorization to trade
 First access to credit pool
 Reduced trading ratios
 Extended compliance
schedules
 Greenhouse Gas
credits
Particularly pilot trades:

14. Greenhouse Gas Credits
EPRI PID# 1013128 A. Diamant, Project Manager
 Nitrous oxide is a powerful GHG.
 One ton of N2O
is equivalent to
296 tons of CO2.

15. Accelerating Application to
Other Watersheds
 Precedent for cooperation among
regulators and industry.
 Regulatory drivers and incentives.
 Manage liabilities.
 Validation of results.
 Removal of regulatory
barriers.

16.  Draft rule issued June 7, 2013.
 Nitrate/nitrite limits on FGD WW.
 0.17 mg/L max
 0.13 mg/L avg
 Forces biological treatment.
 Limits must be met before commingling
or discharge.
 Capital costs - $14 to $47 million.
 O&M costs - $250K to $750K.
Removal of Regulatory Barriers
EPA Proposed Effluent Guidelines:

17. QUESTIONS?
Tim Lohner, Ph.D.
Consulting Environmental Specialist
Water & Ecological Resource Services
614.716.1255
twlohner@aep.com
American Electric Power
1 Riverside Plaza
Columbus, Ohio
614.716.1000
aep.com