AZ officials trying to kill federal plan to clean air

State officials and utilities are trying to kill a plan by the U.S. Environmental Protection Agency to force owners of three coal-fired power plants to install expensive pollution control equipment to improve visibility.

Henry Darwin, director of the state Department of Environmental Quality, said the federal proposal to reduce oxides of nitrogen, known in the business as NOx, will impose hundreds of millions of dollars of unnecessary costs on utilities -- and, by extension, their customers.

More to the point, Darwin pointed out that the reduction being proposed has absolutely nothing to do with public health. Instead, it focuses on EPA's claim that the pollutants are impairing visibility in the Grand Canyon and other natural parks.

But Darwin insisted that there would be "no discernible identifiable difference'' in visibility between the less-expensive plan his agency is pushing and what the EPA wants.

Gov. Jan Brewer has her own theory about the push.

"I don't think it has anything to do with air quality,'' she told Capitol Media Services.

"It has everything to do with the Obama administration going to war on coal,'' Brewer continued. "It's more about politics and not science.''

But EPA spokeswoman Margo Perez-Sullivan said that ignores one simple fact: It was Congress that enacted the law more than a decade ago requiring her agency to take the steps to begin reducing visual pollution now, not the current administration.

The fight pits questions of visibility against economics: What's it worth to restore the Grand Canyon and a dozen other federal parks and wilderness areas to the point where the air looks like it did before there were the power plants and other sources of visual pollution.

Congress approved laws in the 1990s requiring restoration of "natural visibility'' in these parks by 2064. More immediately, states are required to show they are making reasonable progress toward that goal.

But unlike laws on health effects, Congress specifically said the plans have to be based on a cost-benefit analysis, weighing the price tag against the improvement.

What brings the issue up now is that the federal Clean Air Act specifically requires power plants built between 1967 and 1977 to adopt the "best available retrofit technology'' to improve visibility within 300 kilometers, about 186 miles. Each state was given the chore of doing that analysis.

EPA did accept DEQ's proposals for cutting sulfur dioxide and particulates. But it rejected the state's analysis of costs versus benefits for NOx.

"We believe that we propose a cost-effective solution,'' Darwin said. That generally involves relying on burners designed to reduce pollutants; the EPA is instead pushing more expensive catalytic converts.

Kelly Barr, senior director of environmental policy management at Salt River Project, whose Coronado power plant is being targeted, said her utility already has spent $500 million installing a catalytic converter on one of the two units of its Coronado plant near St. Johns. But Barr said EPA now wants an even more effective converter on the other plant, something she said would add another $110 million in expenses.

Barr said she cannot say what that translates to in customer costs. But she said a "significant portion'' of SRP's current 4.8 percent rate hike is linked to paying off that first $500 million.

Ed Fox, Barr's counterpart at Arizona Public Service, told a similar story.

He said APS already voluntarily spent $324 million installing pollution control equipment on its Cholla power plant near Holbrook. He said the EPA mandate would cost another $182 million in equipment, plus operating expenses.

"For what?'' he asked. "For a change in emission reductions that won't be humanly perceptible?''

That's also the assessment of Geoff Oldfather of the Arizona Electric Power Cooperative, whose Apache Power plant in Cochise is one of those affected. He said spending the extra money EPA wants for catalytic converters over the change in burners proposed by DEQ, would result in an "imperceptible'' difference in visibility.

"We don't agree,'' responded Colleen McKaughan. She is the EPA's associate director of the agency's regional air quality division. She said EPA's own studies show there would be a "perceptible'' difference, especially when the combined effects of the three Arizona power plants are concerned.

Fox agreed with Brewer that the rules seem to have an agenda beyond visibility.

"It seems pretty clear that the direction the EPA has taken under this administration, based upon environmental issues, is to impose significant costs on fossil plants which will make them uneconomic,'' he said. Fox said that is not just rhetoric, saying that if the federal agency does not back down APS may have to close down one of the units at its Cholla plant.

Brewer said that's why the federal government should leave the question of what's appropriate to each state.

"They give no consideration about the jobs that are going to be lost because of their overregulation and the higher energy costs for the Arizona energy consumers,'' she said. And Brewer said if the federal government really believes that the difference in visibility is worth the expense, "then send the billion dollars it's going to cost to implement it.''

McKaughan said her agency is weighing the costs in relation to the benefits. But she said there is no specific formula.

"There is no bright line,'' she said. "This a case-by-case analysis.''

What that means, she said, is looking at each power plant and determining both the capital costs of the retrofit and the operating costs. And that also includes the ability of a plant owner to recoup the costs over the next 20 years.

But the bottom line, she said, is that EPA has the research to show that people will be able to see the difference once the pollutants are removed from the air -- and that what is being proposed will not be an undue financial hardship on the affected utilities.

What's missing from that, said Darwin, is some common sense -- particularly since the law does not require the restoration of pollution-free conditions until 2064.

"To spend billions of dollars in 2012 to resolve an issue that doesn't need to be resolved until 2064 just doesn't seem like a reasonable approach,'' he said.

Oldfather said AEPCO, owned by member utilities, has been working to comply with what the state has proposed to reduce visual pollution. He said it's unfair for EPA to now reject the state's plan.

"How can we do any responsible planning for anything in terms of using our resources when we don't know how to anticipate these kinds of changes in terms of the regulatory dynamic?'' he asked.

Brewer said she also is upset that the EPA is unilaterally rejecting DEQ's plan.

The governor said any differences between what the state and federal agencies want should be worked out cooperatively as has been done in the past. Instead, EPA, after reviewing Arizona's assessment, has simply decided that for this type of pollution, the state plan is inadequate and will be overridden.

McKaughan conceded the point. But she said her agency has no choice: A lawsuit against her agency by environmental groups for failing to meet deadlines resulted in a consent decree requiring EPA to take final action by Nov. 15.

The next step in the battle takes place Tuesday evening at a public hearing at the federal courthouse in Phoenix. EPA also agreed this past week to two additional hearings next month, one in Holbrook and the other in Benson.

But McKaughan said that Nov. 15 deadline remains firm.