PSEG Reduces Emissions at Coal-Fired Plants, Wants Rivals to Do the Same

NJ power supplier backs federal clean air standards -- a decade after they were defined

More than two decades after Congress passed tough new rules to clean up the nation’s air, the chief executive officer of one of the region’s largest power suppliers said yesterday the country should adopt those standards.

“It is time for the nation to implement the Clean Air Act amendments of 1990,’’ Ralph Izzo, chairman and CEO of Public Service Enterprise Group, said yesterday in response to a question from a reporter following the company’s quarterly earnings call.

“The reality is this is going to happen,’’ said Izzo, whose company has invested more than $1 billion in upgrading two coal-fired plants to comply with stricter air pollution standards for mercury, only to see those rules delayed by opposition from other power suppliers.

What’s more, natural gas prices have dropped so low that they have idled some of the company’s coal plants, where big investments have been made to maintain those facilities as baseload generating stations, which typically run all of the time.

Those PSEG Power coal power plants would run more frequently if the federal government imposed stricter standards on mercury and other emissions, forcing dirtier and more polluting coal power plants in other regions to shut down or install expensive pollution controls.

Traditionally, the company’s diversified fleet of power plants generally produced about half of its electricity from nuclear, 35 percent from coal, and 15 percent from natural gas, according to Izzo. Last year, with the lower natural gas prices, 35 percent of the power came from that fuel, with about 15 percent coming from coal-fired generation, according to Izzo.

The falling energy prices from power plants led to a drop in earnings from its subsidiary, PSEG Power, which saw its annual earnings drop to $843 million, compared with $1.1 billion the previous year.

Meanwhile, New Jersey’s largest power supplier is still mulling over its options in the wake of a ruling by the state Department of Environmental Protection that could shut down approximately 2,800 megawatts of capacity that provides electricity during times of peak demand.

In an earnings call earlier in the morning, Izzo said the company is still evaluating what plants should be retired and what facilities may be retrofitted and kept in service prior to the 2015 deadline, when the plants have to shut down because they do not meet tougher air pollution standards.

Previously, the company had said 1,400 megawatts of the so-called high-energy-demand-day plants were worth saving, but Izzo said the company is still evaluating the type of improvements that would be necessary to keep the facilities operating after 2015. The company had previously invested approximately $20 million in about 1,300 megawatts of the units to ensure the plants could run, if called upon by the operator of the regional power grid.

The issue has implications for consumers, too, since the retirement of approximately 4,600 megawatts of generating capacity could drive up electricity costs for ratepayers, especially in parts of New Jersey where congestion already tends to spike prices.

Izzo addressed that issue in a November earnings call.
“Clearly keeping those peakers in would have the maximum benefit for customers in terms of keeping capacity prices down,’’ Izzo said at the time. He also acknowledged the units do produce more ground-level ozone emissions and nitrogen oxide pollution, both of which are the primary ingredients in causing smog.