Star Symposium 2013 The Changing Reality of Energy

Development

Jeffery LaFleur, Vice President Generation Assets APCO/KYPCO

October 22, 2013

2011 2012 2013 2014 2015 2016 2017 2018

Time From Rule Finalization to Compliance

Effluent Limit Guidelines (water discharge limits)

Coal Combustion Residuals

MATS (mercury & air toxics)

2012 & 2014 Compliance PhasesRule Vacated pending Supreme Court Appeal

Environmental Rules Development

CSAPR (SO2 & NOx)

20202019

316(b) Rule (water intake structures)

New Source CO2 NSPS

Existing Source CO2 NSPS

Pro

po

sed

an

d/o

r F

inal

ized

Ru

les

An

tici

pa

ted

R

ule

s

Potential for One Year Compliance Extension

Compliance Timeline Contingent on Permit Renewal Cycle

Compliance Timeline Contingent on State Implementation Plans

Compliance Required from Rule Proposal DateRe-Proposal of Rule Expected

Compliance Timeline Will Vary

20222021

Historic AEP Emission Reductions

Since 1980, AEP’s TOTAL generating fleet has reduced:

SO2 emissions by more than 77 percent

NOx emissions by about 80 percent

0.0

0.4

0.8

1.2

1.6

2.0

1980 1985 1990 1995 2000 2005 2010

SO

2

(mill

ion

s o

f U

.S. t

on

s)

0.0

0.2

0.4

0.6

0.8

NO

x(m

illio

ns

of

U.S

. to

ns)

SO2 Emissions

NOx Emissions

Global CO2 Emissions

4

Global CO2 Emissions

• 2012 global CO2 emissions totaled

32.2 billion metric tons.

• Of that, China accounted for 28 percent.

• The U.S. accounted for 17 percent.

• Global emissions have increased

15 percent since 2005.

• 80 percent of the increase is because of growth in China.

• By 2040, emissions from developing countries will rise by more than 70 percent.

5

U.S. Greenhouse Emissions

6

• In 2011, EGU CO2 emissions were 10 percent below 2005 levels.

• Preliminary 2012 EIA data indicates EGU emissions were 15 percent below 2005 levels.

7

U.S. Greenhouse Emissions

Proposed CO2 Regs

• 1,100 lbs. per MWh for new coal plants.

– CCS would be required to meet goal.

• 1,000 lbs. per MWh for new natural gas plants.

• New Turk plant is 1,800 lbs. per MWh.

8

Cost to Build

9

Installation Cost Per kW

Coal vs. Natural Gas

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MMBTU

IGCC Status

• Duke Edwardsport IGCC– Began commercial operation June 2013.

– 618 MW facility without CO2 capture.

– Estimated Cost: $3.4 billion or $5,500/kW.

• Southern Company Kemper IGCC– Under construction (expected COD mid-2014).

– 582 MW facility with 65 percent CO2 capture (3.5 million tonnes per year).

– Estimated Cost: $4.7 billion to date or $8,000/kW (original estimate about $2.4 billion).

• By comparison, the Turk plant is a 620 MW ultra-supercritical and was completed at a cost of about $1.8 billion, or $2,900/kW.

A Customer’s Bill

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7%Transmission

25%Distribution

Recent Rate Activity

The Appalachian Power ExperienceThe Effect on Customers

• Low per capita income

– West Virginia - $23,697.

– Virginia - $21,636 (our service area).

• Unemployment remains high

– West Virginia – 6.3 percent.

– Virginia – 5.8 percent (our service area).

• 54 percent of customers have electric heat.

• 25 percent of customers are behind on their bills.

• 400 percent increase in uncollectibles.

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Customer Data