Today Ameren Missouri announced its environmental compliance strategy to meet a new stringent federal rule that requires significant reductions in sulfur dioxide (SO2) emissions. The backbone of the strategy is a long-term contract for the purchase of 91 million tons of ultra-low sulfur coal from Peabody Energy through 2017.
The new federal regulation, the Cross State Air Pollution Rule, will require reductions of SO2 emissions by 73 percent and nitrogen oxide emissions by 54 percent from 2005 levels.
“This agreement reflects a proactive business strategy to comply with recently issued federal environmental regulations at significantly lower costs for our customers. In particular, this contract will allow us to avoid significant levels of environmental expenditures by 2014 as well as defer the installation of costly clean air filtration equipment well beyond 2017 to meet the federal government’s new stringent standards for sulfur dioxide emissions reductions. In total, this strategy will avoid rate increases that would have been necessary just to meet the SO2 reduction requirements – those would have been in the range of 15 to 20 percent by 2017 for our customers,” says Warner Baxter, Ameren Missouri President and CEO.
“The contract represents a major commitment between the largest Powder River Basin producer and the largest Powder River Basin customer,” said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. “This contract is a win-win for Ameren and Peabody, reinforcing the strong relationship between our companies and the growing market for low sulfur Powder River Basin coal.”
Baxter added, “For many years, we have anticipated that more stringent rules would be coming and have been taking proactive steps to mitigate the impact on our operations and customers.”
A key component of that strategy was the installation of $600 million of clean air filtration equipment, also known as scrubbers, which eliminate nearly 100 percent of all sulfur dioxide emissions from Ameren Missouri’s Sioux Plant. Installation of this equipment provided the flexibility to employ the ultra-low sulfur coal compliance strategy that will result in significant customer benefits.
“The bottom line is that this strategy is a win-win for our customers, the environment and the state’s economy,” said Baxter, “With this approach, we will produce cleaner air, reduce the impact of stringent environmental standards on our customers, strengthen our state’s energy and economic future, and enter into a long-term contract with one of Missouri’s leading companies---Peabody Energy.”
Baxter said that while there will still be significant cost savings from this strategy, environmental compliance costs will continue to rise from current cost levels under the recently issued regulations. In addition, the U.S. Environmental Protection Agency is considering additional regulations for air quality, coal ash and water. These new regulations mean compliance costs are likely to rise even more in the future as final regulations are issued.
This contract is another step in Ameren’s long history of aggressively reducing emissions. Since 1990, Ameren Missouri has reduced mass emissions of sulfur dioxide (SO2) by 62 percent and mass emissions of nitrogen oxide (NOx) by 75 percent.
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Ameren Missouri has been providing electric and gas service for more than a century, and our electric rates are among the lowest in the nation. We serve 1.2 million electric and 126,000 natural gas customers in central and eastern Missouri. Our mission is to meet their energy needs in a safe, reliable, efficient and environmentally responsible manner. Our service area covers 63 counties and more than 500 towns, including the greater St. Louis area. For more information, visit AmerenMissouri.com.
Contact: Rita Holmes-Bobo, 314.554.2182