AEP supports EPA’s NSR reform process; says clarification of routine activities will eliminate uncertainty

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COLUMBUS, Ohio, March 31, 2003 - American Electric Power (NYSE: AEP) today said it strongly supports the Environmental Protection Agency’s (EPA’s) efforts to clarify the types of activities that would constitute “routine maintenance, repair and replacement” under the agency’s New Source Review (NSR) program and urged the agency to complete work on its proposal as expeditiously as possible.

AEP made the comments in a written statement submitted today as part of public hearings on EPA’s proposed revisions to the existing regulations. The proposed revisions were published in the Federal Register Dec. 31, 2002.

“We are pleased that the EPA is moving forward with its proposal,” said Mark Gray, AEP vice president-engineering and environmental services. “We strongly support the agency’s efforts to provide greater clarity and certainty regarding the types of activities that do not constitute a physical or operational change and would not make an existing generating facility subject to NSR. A clearer applicability test that encourages good maintenance practices and continued innovation is consistent with the common goals of improved efficiency and lower emissions.”

The current NSR regulations do not contain a definition of “routine maintenance, repair and replacement,” and recent EPA decisions have relied on case-by-case analysis that provides little guidance for companies. Clearly defining routine maintenance, repair and replacement will eliminate uncertainty and allow companies to proceed with the regular maintenance, repair and replacement activities necessary to ensure the proper operation and reliability of their plants.

EPA is soliciting comments on two key proposals:

  1. Establishing a maintenance, repair and replacement allowance on an industry-specific basis

  2. Clarifying that the replacement of existing components or equipment with new, functionally equivalent equipment is routine

AEP believes both proposals, with clarification, should be adopted.

In its statement supporting clear routine maintenance, repair and replacement allowances, AEP said the allowances must be based on standard industry practice and have sufficient flexibility to accommodate industry specifics. “For generating units in the utility industry, maintenance, repair and replacement activities routinely occur on a planned and emergency basis, some on longer cycles of eight to 12 years or even longer. To accommodate these cycles, any maintenance, repair and replacement allowance should be based on a multi-year average, preferably five years,” Gray said.

AEP also said the final rule should recognize that incorporating new materials, refined designs and enhanced instruments and controls is consistent with functional equivalence and has been a key ingredient in the significant progress the industry has made in improving efficiency and air quality. Air emissions in the utility industry have steadily and dramatically declined over the last 30 years, while total generation has increased at an equally steady and dramatic rate, according to Gray.

“Innovation is a valuable and environmentally beneficial tool that should be encouraged, not discouraged,” he said. “Real gains in efficiency are highly dependent on the introduction and perfection of a new generation of technologies. Greater efficiency and reliability tend to decrease emissions, and therefore, make a significant contribution to improving the environment. Failure to allow for incorporation of technological advances would impede further environmental progress.”

In addition to the written statement submitted today, AEP will submit detailed written comments on the routine maintenance, repair and replacement proposal to EPA for consideration. EPA is accepting comments through May 2.

American Electric Power owns and operates more than 42,000 megawatts of generating capacity in the United States and select international markets and is the largest electricity generator in the U.S. AEP is also one of the largest electric utilities in the United States, with almost 5 million customers linked to AEP’s 11-state electricity transmission and distribution grid. The company is based in Columbus, Ohio.

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Melissa McHenry
Manager, Corporate Media Relations
American Electric Power