Ill EPA Approves Edison International Unit's Pollution Control Plan
First Published Wednesday, 24th November 2010 01:35 am - © 2010 Dow Jones
Dow Jones NEWSWIRES
The Illinois Environmental Protection Agency has approved plans by Edison International's (EIX) Midwest Generation unit to install pollution-control equipment at one of its coal-fired power plants, although the company said Tuesday it hasn't decided yet whether to install the equipment or shut down the plant.
The Illinois EPA issued a construction permit to Midwest Generation on Friday to install flue gas desulfurization equipment to cut emissions of sulfur dioxide and particulates from the plant, the company said in a filing with the Securities and Exchange Commission. The permit authorizes the company to use a dry scrubbing system with sodium-based sorbents to cut sulfur dioxide emissions as required by state and federal rules at the company's Waukegan coal-fired power plant unit 7 north of Chicago.
Midwest Generation, part of Edison's Edison Mission Energy unit, hasn't decided whether to go ahead and install the equipment, or shut down the plant, which could be subject to additional pending federal air quality rules. Market conditions will also weigh heavily on Midwest Generation's decision, the company said. Merchant generators like Midwest Generation have been hit by weak U.S. power demand amid the economic downturn and slow recovery, and low power prices due to low natural gas prices and sluggish demand growth. Many utilities are expecting demand and prices to remain soft through 2012.
Midwest Generation spokesman Doug McFarland said the company may wait until "sometime in 2012" to decide whether to invest in the pollution-control equipment or shut down Unit 7 of the Waukegan power plant. The company must cut emissions at six Illinois plants and has said it will decide over the coming months whether to install pollution-control equipment at all or some of the plants.
Macquarie Equities Research analyst Angie Storozynski said the Illinois EPA's approval is a win for the company and could help lift the value of the Midwest Generation coal plants, pending higher power prices in the Midwest.
"Power prices in the Midwest need to significantly recover for us to assign any value to this merchant power business, but with today's EPA decision, EME is becoming a true call option on recovery in forward dark spreads," Storozynski wrote in a note to clients.
Shares of Edison International, which owns utility Southern California Edison, closed Tuesday 1.6% lower, at $37.15.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; firstname.lastname@example.org