In fact, environmentalists are counting on EPA to bring coal-fired plants under some form of carbon regulation, via either a cap on CO2 emissions or a carbon tax that would artificially drive up the cost of burning coal. The agency is legally bound to address utility carbon emissions under a 2010 settlement agreement reached among the Obama administration, environmental groups and states concerned about the role industrial CO2 emissions have in a warming climate.
A first step toward utility-sector carbon regulation came last year, when EPA rolled out its "Carbon Pollution Standard for New Power Plants." That proposal, which remains in draft form after EPA missed an April 13 deadline to issue a final rule, would restrict coal plant carbon emissions to 1,000 pounds of CO2 per megawatt-hour of electricity generated. Most experts agree the rule would make construction of new coal plants impossible for at least another decade until carbon capture and storage technologies are proved to work and then commercially deployed.
The expected second phase of utility carbon regulation targets the several hundred existing coal plants that operate in almost every state in the country, accounting for roughly 40 percent of total U.S. electricity generation, according to the most recent Energy Department figures.
Such plants -- which include the Gallatins and Big Sandys of the utility industry -- remain stuck in a web of uncertainty whereby any short-term improvements in environmental performance could be trumped by much tougher EPA rules on carbon dioxide coming in the future.
That uncertainty was looming large when AEP and Kentucky Power chose last year to abandon the previously announced program of extensive environmental retrofits at Big Sandy.
Melissa McHenry, an AEP spokeswoman, said the decision to close Big Sandy was based on a complex set of economic factors, including whether AEP's 175,000 customers in eastern Kentucky could shoulder the cost of the upgrades, which would have translated into a roughly 31 percent rate hike across the utility's service territory.
Rather than risk the downside of spiking electricity rates, AEP has proposed that Kentucky Power acquire a 50 percent ownership stake in a power plant in West Virginia for roughly $536 million, or half of what the environmental controls would have cost at Big Sandy.
"There's a lot of factors that go into those decisions. And at the end of the day, we have to do what we think is right to protect our ratepayers and our investors," McHenry said. In the case of Big Sandy, closure was deemed the best option, she said.
So what of TVA's decision to extend the Gallatin plant's life well into its sixth decade?
'A close question' on Gallatin
Scott Brooks, a TVA spokesman, said Gallatin underwent an exhaustive review in which utility executives and analysts weighed three scenarios for the plant: pollution control upgrades, converting the plant to burn biomass or retirement.
Ultimately, he said, the analysis showed TVA's best option was to invest in pollution controls for the non-CO2 pollutants rather than convert or shut down the plant. "Historically, it is one of the most efficient in the fleet," Brooks said in an email.
Cost scenarios for the various proposals also affected the decision. While adding the pollution controls was estimated to cost roughly $1,000 per kilowatt of energy produced, conversion to biomass ranged in cost from as little as $500 to as much as $3,000 per kilowatt, according to a federally required environmental assessment of the proposals.
"Converting the [Gallatin] boilers to biomass could also result in a reclassification of the boilers to new industrial boilers (IBs), with different associated MACT (maximum achievable control technology) requirements," the analysis states. "IBs burning biomass are subject to emission limitations for [particulate matter], mercury, and carbon monoxide. It is likely that TVA would have to obtain a new major source construction permits to support converting [Gallatin's] boilers to biomass; a potentially complicated and lengthy process."