EPA-905/5-76-003-A
STUDY DOCUMENT NUMBER 3
FINANCIAL IMPACT OF THE
PROPOSED AND REVISED SULFUR DIOXIDE REGULATIONS
IN THE STATE OF OHIO
PREPARED FOR
THE U,S, ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
BY
TEMPLE, BARKER & SLOANE, INC,
15 WALNUT STREET
WELLESLEY HILLS, MASSACHUSETTS 02181
AUGUST 27, 1976
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PREFACE
This report has been submitted to the United States
Environmental Protection Agency in partial fulfillment of Con-
tract No. 68-01-2803 by Temple, Barker & Sloane, Inc., 15 Wal-
nut Street, Wellesley Hills, Massachusetts.
TBS
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TABLE OF CONTENTS
CHAPTER PAGE
1 INTRODUCTION AND CONCLUSIONS 1
2 METHODOLOGY AND SCOPE OF ANALYSIS 7
3 FINANCIAL IMPACT OF THE REVISED SULFUR 14
DIOXIDE REGULATIONS
Consumer Charges and Operating Revenues 14
Average Residential Electric Bill 18
Operation and Maintenance Expenses 19
Capital Expenditure Requirements 21
External Financing Requirements 24
Impacts on Municipal and Cooperative 33
Utilities
4 FINANCIAL IMPACT OF THE ORIGINALLY PROPOSED 35
SULFUR DIOXIDE REGULATIONS
Consumer Charges and Operating Revenues 35
Average Residential Electric Bill 38
Operation and Maintenance Expenses 38
Capital Expenditure Requirements 40
External Financing Requirements 40
APPENDIX
A SUMMARY OF FINANCIAL DATA 46
B COSTS OF POLLUTION CONTROL STRATEGIES 64
TECHNICAL APPENDIX
TBS
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CHAPTER 1
INTRODUCTION AND CONCLUSIONS
This report presents the direct financial effects
of proposed sulfur dioxide regulations on the electric power
consumers and the electric utility industry in the State of
Ohio. The specific pollution control regulations considered
in this report are the regulations covering sulfur dioxide
(S00) emissions at existing fossil fuel generating plants pub-
^J '" .--...^ --.--.-...- .
lished by the U.S. Environmental Protection Agency (EPA). Re-
gion V, on November 10, 1975, and revised on August 27, 1976.
The impacts of the S00 regulations proposed originally and the
^j
revisions are analyzed separately.in this report. Throughout
this report, the terms "S00 regulations" and "regulations"
ฃi
refer only to the SO2 regulations applicable to existing fossil-
fuel generating stations.
The impacts of the SO0 regulations are based primarily
ฃ
upon the results of EPA-sponsored research by three firms:
1) engineering cost studies of air pollution control equipment
on Ohio power plants by PEDCO Environmental Specialists, Inc.;
2) least-cost optimization analysis to estimate compliance strat-
egies by Energy and Environmental Analysis, Inc. (EEA); and 3)
economic and financial evaluations based on those cost and com-
pliance estimates by Temple, Barker & Sloane, Inc. (TBS).
CONCLUSIONS
The major conclusions in this report are presented
below and summarized in Table 1. Unless otherwise noted, all
costs are in constant 1975 dollars.
The original and revised SO2 regulations were published in the Federal
Register, Volume 40, Number 2173 November 10, 1975, and Volume 41,
Number 168, August 27, 1976, respectively.
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Assuming implementation of the revised S02 regula-
tions, the impact on the investor-owned electric utilities
and their customers would be as follows:
Average consumer charges and utility
operating revenues would increase 2.9 ^
percent in 1980 and 1.8 percent in 1985.
This would cause the average residential
customer's monthly electric bill to in-
crease $0.88 ($30.33 to $31.21) by 1980
and $0.68 ($37.57 to $38.25) by 1985.
Including the effects of inflation, the
increase would be $1.17 in 1980 and $1.13
in 1985.
Annual operating and maintenance expense
(including fuel) would increase about 1.1
percent in 1980 and 0.9 percent in 1985.
The annual increase by 1985 will be $30.1
million.
Capital expenditures (defined as cash
outlays and allowance for funds used
during construction (AFDC)), would in-
crease by $542 million during the period
1976-1979. This is a 10.7 percent in-
crease over the baseline capital expen-
ditures of $5,081 million which will be
required for this period in the absence
of any SO0 regulations.
ฃi
External financing required to support
these capital expenditures would increase
by $497 million over the original exter-
nal financing requirement of $3,938 mil-
lion for the period 1976-1979, a 12.6
percent increase.
2
The decreasing relative effect of the SO2 expenditures is due to
inflation and increasing costs of operating the utilities.
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Of the eight major investor-owned utili-
ties in Ohio, five could reasonably be
expected to have little or no difficulty
in obtaining financing for the equipment
required by the revised regulations. Two
of the utilities, Ohio Power and Ohio Edi-
son, may have some difficulty obtaining
debt financing but should be in a posi-
tion to issue additional common stock to
cover the cost, if necessary. One utility,
Ohio Valley Electric, would not be af-
fected by the revised regulations.
The impacts of the revised SO- regulations on the
municipal and cooperative utilities in Ohio would be:
Average consumer charges for municipal
and cooperative customers (almost en-
tirely residential) would increase by
2.9 percent in 1980 and 2.1 percent in
1985. The average monthly residential
bill in 1980 would increase by $0.66,
from $22.60 to $23.26.
Capital expenditures would increase by
$24.1 million and external financing re-
quirements would increase by approxi-
mately $16.8 million over the period
1976-1979.
Annual operating and maintenance costs
would increase by $3.2 million per year,
Had the original proposed SO0 regulations been
ฃi
implemented, the effect on investor-owned utilities would
have been:
Average consumer charges and utility
operating revenues would have increased
7.9 percent in 1980 and 4.9 percent in
1985. The average residential customer's
monthly electric bill would have increased
$2.40 ($30.33 to $32.73) in 1980 and $1.83
($37.57 to $39.40) in 1985. Including the
effects of inflation, the increase would
have been $3.19 in 1980 and $3.06 in 1985.
TBS
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4
Capital expenditures, including allowance for
funds used during construction (AFDC), would
have increased by $1,480 million during
the period 1976-1979. This is a 29.1 per-
cent increase over the capital expenditures
of $5,081 million which will be required
for this period if no SC>2 regulations are
implemented.
External financing required to support
these capital expenditures would have in-
creased by $1,347 million over the original
external financing requirement of $3,938
million for the period 1976-1979a 34.2
percent increase.
Annual operating and maintenance expense
(which includes fuel) would have increased
about 3.2 percent by 1980 and 2.6 percent
by 1985. The annual increase by 1985
would have been $86.1 million.
There is a substantial difference in the relative
impacts of the revised S0? regulation and the original pro-
posed regulation. As can be seen from the data in Table 1,
the original regulation would have had about two and one-half
times the impact of the revised regulation. For example, the
increase in 1980 consumer charges due to the original-regula-
tion would have been 2.7 times the increase due to the revised
regulation. Cumulative capital expenditures for SO- equipment
would have been $938 million (2.7 times) larger under the or-
iginal regulation than the revised regulation. Similar dif-
ferences exist in external financing.
It should be noted that all capital expenditures re-
quired by either the original or the revised SO- regulations
would be incurred prior to 1980. However, changes in operating
costs resulting from the regulations would continue throughout
the remaining lives of the generating equipment affected.
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Table 1
IMPACT OF S02 REGULATIONS ON THE INVESTOR-
OWNED OHIO ELECTRIC UTILITY INDUSTRY
(all figures in 1975 dollars)
Consumer Charges 1976
(mills/kwh) 1980
1985
Operating Revenues 1976
(millions of 1980
dollars) 1985
Average Monthly 1976
Residential Bill 1980
(dollars) 1985
Capital Expenditures,
1976-1979
(millions of
dollars)
External Financing,
1976-1979
(millions of
dollars)
Baseline
$23.75
27.54
30.94
$3,176
4,451
6,285
$23.55
30.33
37.57
$5,081
$3,938
Revised
\2 Rงฃ
$23.77
28.35
31.49
$3,178
4,591
6,398
$23.57
31.21
38.25
$5,623
$4,435
Oriqinal
S0_2 Reg's.
$23.81
29.73
32.44
$3,184
4,815
6,591
$23.59
32.73
39.40
$6,561
$5,285
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These conclusions and the data and analysis supporting
them are the subject of the following chapters. Chapter 2 cov-
ers the method of analysis employed and the scope of the study.
Chapters 3 and 4 cover in detail the financial impacts of the
revised and originally proposed S02 regulations, respectively.
Appendix A contains summary financial data from which the con-
clusions were drawn. Appendix 8 contains the pollution control
cost data supplied to TBS by EPA, PEDCO, and EEA for use in this
analysis.
A separate Technical Appendix contains the full set
of projections for each of the eight Ohio investor-owned util-
ities, the assumptions and data on which the projections were
based, and a detailed description of the computerized model
used in the study.
T
B
S
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CHAPTER 2
METHODOLOGY AND SCOPE OF ANALYSIS
The methodology employed for this analysis is con-
sistent with the national approach taken by EPA. Temple, Bar-
ker & Sloane, Inc. (TBS) performed the analysis for EPA's May
1976 report Economic and Financial Impacts of Federal Air and
Water Pollution Controls on the Electric Utility Industry.3
To determine the impact of the SO0 regulations on
Ci
existing plants, financial projections for the Ohio electric
utility industry were made assuming no EPA S00 regulations
CA
on existing plants. This projection does, however, include
the expenditures to be made for pollution control equipment
on future power plants (including compliance with particu-
late regulations, New Source Performance Standards, and ef-
fluent guidelines) and EPA estimates of expenditures to be
made in bringing existing plants into compliance with partic-
ulate regulations and effluent guidelines. The financial con-
dition of the Ohio electric utility industry assuming compliance
with the SO0 regulations by the end of 1979 was compared to the
^
projections made assuming no S02 regulations to measure the im-
pact of the regulations. The same analysis was performed for
both the revised and the original regulations. Appendix B shows
the pollution control equipment and operating costs used in the
study.
TBS has used the same computerized Policy-Testing
model (PTm) of the electric utility industry in this Ohio util-
ity study as it used in the national study. The general approach
to developing the industry projections has been to utilize the
3
Copies available from the National Technical Information Service, Spring-
field, Virginia 22151. (EPA-230/3-76-013)
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PTm model for the financial relationships and to rely upon
individual utilities for the data and assumptions underlying
the projections.
The PTm model for the electric utility industry con-
tains forecasting relationships of energy requirements, capac-
ity, and utilization at the company level. In this applica-
tion, PTm takes as inputs each utility's projections of gen-
eration, peak load and capacity additions. It then forecasts
operating expenses, revenues, financing requirements, and ul-
timately, consumer charges from 1976 to 1985.
There are three major areas of data requirements for
PTm. The first area comprises detailed operating and financial
statistics for the base year, 1975. These data were obtained
from material supplied by the utilities. Second is a set of
assumptions regarding future load growth and capacity additions
and retirements. The data contained in each company's Ten Year
Forecast Report to the Ohio Power Siting Commission were used
to meet this requirement. Finally, PTm requires projections
of a variety of economic and physical variables, including new
plant costs (per kilowatt of capacity), fuel prices, interest
rates, inflation rates, tax rates, heat rates, capacity factors,
etc. Many of those items were available in the material sup-
plied by each utility, and where available, were used in making
the projections. Where such data were not provided by the com-
pany, TBS utilized estimates developed previously in TBS' analy-
sis for EPA of the national impacts of pollution control regu-
lations upon the electric utility industry. Capital and operating
costs associated with each type of pollution control were pro-
vided by the EPA.
TBS
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Due to the diversity in size and operating charac-
teristics of the major electric utilities in Ohio, the im-
pacts of the SO0 regulations were determined on a company
ฃ
basis rather than a state-wide basis. There are eight major
investor-owned electric utilities in Ohio. Together, they
account for approximately 94 percent of the coal-fired elec-
tric production capacity (1975) and approximately 96 percent
of the total power generated in Ohio (1974). The relative
size of these utilities is shown in, Figure 1 and Table 2.
The majority of the power and generating capacity not furnished
by these investor-owned utilities is provided by a number of
municipal and cooperative utility systems. The municipal and
cooperative systems are very small compared to the investor-
owned companies. In 1975 their total coal-fired generating
capacity was about 1,318 megawatts. The major investor-owned,
municipal, and cooperative utilities are listed in Table 2.
A number of factors dictated that the analysis of
the effects of the S02 regulations on the municipal and coop-
erative systems be performed on a composite basis; that is,
the group of municipals and cooperatives be treated as one
utility system. These factors were: 1) the relatively small
size of each; 2) a general lack of accurate and timely finan-
cial and operating data; and 3) the relatively static nature
of the municipals' operations (i.e., little growth in capacity).
When projecting the financial condition of each of
the investor-owned utilities, the operation of existing plants
and construction of new plants outside Ohio was included. The
cost of pollution control equipment (PCE) being, or to be, in-
stalled on these plants and all new plants, both in and out of
Ohio, was taken from utility sources, where available. EPA cost
estimates for PCE were used only for existing plants in Ohio,
bringing them in compliance with particulate regulations, ef-
fluent guidelines, and S02 regulations.
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Figure 1
GENERATING CAPABILITY*
OF THE MAJOR OHIO ELECTRIC UTILITIES - 1975
Municipals &
Cooperatives
Toledo Edison
Comp any
Columbus and
Southern Ohio
Ohio Valley Elec-
tric Corporation
Dayton Power &
Light
Cincinnati Gas &
Electric
Ohio Edison
Company
Cleveland Elec-
tric Illuminating
Ohio Power
Company
1331
Legend:
1013
coal fired
other
2105
2354
2365
o
i
3509
3664
3888
8607
1000 2000 3000 4000 5000 6000 7000
Megawatts of Capacity
*Net summer generating capability of each utility. Includes gene-rating capacity inside
and outside of Ohio. These figures were used in making the projections in this analysis.
8000
9000
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TABLE 2
1
STEAM-ELECTRIC PLANT CAPACITY OF OHIO UTILITIES - 1974
Utility
Investor-Owned
Cincinnati Gas & Electric
Cleveland Electric Illuminating
Columbus and Southern Ohio
Dayton Power and Light
Ohio Edison
Ohio Power
Ohio Valley Electric
Toledo Edison
Total Investor Owned
Coal'
Capacity (MV.r)
Total'
Capacity (MW)
Generation
(million kwh)
Capitalization
(millions of $)
1826.9
3686.2
1677.8
3303.4
3756.0
5508.9
1086.3
947.0
2333.8
3686.2
1677.8
3303.4
3756.0
5508.9
1086.3
947.0
6662.5
19246.9
7874.1
12860.0
18164.1
14839.2
8045.0
5220.7
$1088.5
1263.1
781.8
798.9
1576.7
2143.7
127.9
665.5
i
M
21792.5
22299.4
92912.5
Municipals and Cooperatives
Buckeye Power
Cleveland
Columbus
Dover
East Palestine
Kami Iton
Napoleon
Orrville
615.0
160.0
39.5
35.9
16.5
133.5
23.7
108.5
615.0
160.0
52.5
35.9
16.5
133.5
23.7
108.5
2824.0
171.6
107.1
74.9
31.8
234.4
59.0
144.0
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Utility
Painesville
Piqua
Reading
St. Mary's
Shelby
Total Municipals and Cooperatives
Total Ohio
Coal
Capacity (MW)
63.0
54.8
15. 3
12.5
40.0
1318.2
23110.7
TotalJ
Capacity (MW)
63.0
54.8
15. 3
12.5
40.0
1331.2
23630.6
Generation
(million kwh)
128.9
161.0
55.6
22.5
63.7
4078.5
96991.0
Capacity and generation of jointly-owned plants is listed only under the company which
operates the plant, not the companies which share ownership. This chart is intended
only for showing the relative size of investor-owned, municipal, and cooperative utili-
ties. The definition of capacity is different from that used in Figure 1. These numbers
were not used in making the projections in this analysis.
2
Total coal-fired steam-electric capacity located in Ohio, 1975.
2
Total steam-electric capacity located in Ohio, 1975.
4
Total generation of steam-electric plants located in Ohio, 2974.
Capitalization as of December 31, 1975, except Ohio Power (June 30, 1975).
Source: Steam-Electric Plant Factors, 1975, National Coal Association
to
i
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Four sets of projections were made for each company.
The first was the baseline, which included no expenditures for
pollution control equipment for existing plants, but did in-
clude PCE costs for new plants. The second projection added
to the baseline expenditures those PCE expenditures necessary
to bring existing plants into compliance with particulate and
effluent guidelines (TSP and water). The third and fourth
projections added the expenditures for S02 control required
by the original regulations, and the revised regulations,
respectively, to the expenditures included in the second pro-
jection. When measuring the effects of the S02 regulations,
the third and fourth projections were compared with the second,
A number of assumptions were made when making these
projections which affect the impact of the SOp regulations.
These assumptions were:
Interest rates on capital required for
future expenditures were held constant
at a level near the rate each Ohio util-
ity now pays for new capital.
Each utility realizes a 14 percent rate
of return on equity (in 1975, actual rate
of return ranged from 10 to 14.3 percent).
No plants were retired as a result of the
issuance of the SO- regulations.
Additional detail on the assumptions made for each company
appears in the Technical Appendix.
Each of the eight investor-owned utilities was given
the opportunity to review and comment on the initial baseline
projections. As a result of this review process, a number of
changes and corrections were made at the utilities' request.
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CHAPTER 3
FINANCIAL IMPACT OF THE
REVISED SULFUR DIOXIDE REGULATIONS
The economic impact of the revised sulfur dioxide
(S00) regulations on the Ohio electric utility industry
ฃ.t
and its customers will be evident in a number of areas.
These are:
consumer charges and operating revenues,
average residential electric bill,
operation and maintenance expenses,
capital expenditures requirements, and
external financing requirements.
The regulations will effect both investor-owned and munic-
ipal and cooperative systems in these areas. These effects
were summarized in Chapter 1 and are covered in more detail
below.
CONSUMER CHARGES AND OPERATING REVENUES
For consumers of electricity, the most meaninful
measure of the effect of implementing the revised S00 regu-
ฃj
lations is the increase in annual costs which results. The
total annual cost of S02 control is equivalent to the in-
creased revenues which would have to be collected by the
electric utilities from their customers to cover their in-
creased costs. The required revenues would increase because
T
B
S
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of increased operating and maintenance costs, fuel premiums,
interest charges, depreciation charges, and income and
property taxes. The increase in operating revenues required
in any given year is the cost of SCU control for that year.
It is also meaningful to look at the increase in
operating costs on a per kilowatt-hour basis. Consumer
charges are defined as the annual operating revenues divided
by the kilowatt-hour sales for that year. The increase in
consumer charges due to the SO2 regulations is the increase
in cost of each kilowatt-hour of electricity sold.
Figure 2 shows the consumer charges (in constant
1975 dollars) for each of the eight investor-owned utilities
studied, for the years 1976, 1980, and 1985. In 1976, the
impact of the revised SOp regulations is hardly measurable.
The effect would be most pronounced in 1980, ranging across
utility systems from no increase to a 6.6 percent increase
in consumer charges and averaging 2.9 percent. By 1985, the
relative effect of the S00 regulations (i.e., as a percent of
^j
consumer charges) would decrease due to the increase in other
charges resulting from the construction of new plants and
increased fuel prices.
Figure 3 shows the operating revenues for each
company for the same periods covered by Figure 2. The in-
creases which would result due to S00 control on a percent-
^
age basis are the same as for consumer charges, except for
slight variations due to rounding error.
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FlGURE 2
PROJECTED CONSUMER CHARGES FOR ELECTRICITY
REVISED S02 REGULATIONS
PERCENT INCREASE
DUE TO
H10 VALLEY
ELECTRIC
HIO POWER
INCINNATI
GAS &
ELECTRIC
.EVELAMD
ELECTRIC &
ILLUMINATING
ILEDO EDISON
110 EDISON
,YTON POWER
& LIGHT
ILUMBUS S
SOUTHERN
OHIO ELEC-
TRIC
1976 |9.9 KEY:
1980 : ' II 11. 5 [ 1 BASELINE C
1985 . 1112.4 1 1 TSP AND WA
1 1 CHARGES
ฃeSl S02 REGULA
1976 ' " ' ' ' 1119.8
1980 ' 120.7
1985 1321.8
1976 : |28.2
1980 IE331.9
1985 . E
1975 ' ' 128.2
0.0
HARGES Q g
FER REGULATION g[g
riON CHARGES
0.1
1.5
1.8
0.1
3.1
J35.2 1.8
n 9
1930 ' IE335.3 ' t~R
1985
1S76 131.0
1980
1985
1976 = 129.6
1980
1935
1976- ' : |31.4
1980 : |
1935 - - -.
I97G .' 31.6
1980
1935.. . . .
1 1 1 1 1 1 1 1 1 1 1 ! 1 i 1 1 1 t 1 I i i I_J !_[ I 1 1 } l_L '
]|J^7.3 h'-f
0.2
IE^37,3 5.7
0.1
1 )337.5 2.2
1 141.0 1.4
'0.0
136.0 1,2
I |H1.7 0.7
0.0
~~^39.7 2.6
H44.3 i 5
!!tlll!l ! I 1 ' ! 1 1
3 5 10 15 20 25 30 35 40 45 50
CONSTANT 1975 MILLS PER KILOWATT-HOURS SOLD
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FlGURE 3
PROJECTED REQUIRED ELECTRIC OPERATING REVENUES
REVISED SO-, REGULATIONS
OHIO VALLEY
pi prTp T r
OHIO POWER
CINCINNATI
/-AC 9
ELECTRIC
CLEVELAND
PI FfTR I f ?,
ILLUMINATING
TOLEDO EDISON
OHIO EDISON
DAYTON POWER
SI f fiUT
COLUMBUS &
SOUTHERN
OHIO ELEC-
TRIC
KEY: SOa CONTROL
1376 : 1 181.3 1 ' TSP " WATER REVENUES 0.0
1980 1209.0 EHH sฐ2 REVENUES 0.0
1985 11226.2 " " U,U
U.976- .:' .:" ,, l| 842.4 0.1
-1980 . " 111,069.0 1,5
1985. . II 1.372.9 0.8
1976 1362.4 0.2
1980 .:. . .. . . . IS 530.2 3.1
11985. :...- ' -II 806. 8 1,8
J976 : 1480.7 0.2
J980 P 771.1 G.fi
:]985 , - Illl, 047. 2 4.2
J976 I 223.9 0.2
:1980 $ 332.2 5.7
4985 1 485.6 3.1
-1976 | 545.3 0.1
1930 . 0342.4 2.2
:1985 .-. .... Jli.iQfi.Ji i.a
.1976 . 1286.. 6 O.n
1980 11414.9 1.2
.1985 .... !!,,.(, ' n7
1976 ' 255. S 0.1
]980 11412.6 2.5
]985 . . - . 1(619.3 1.5
! 1 ! 1 t 1 } |
200 400 600 800 1,000 1,200 L400 1,600
MILLIONS OF CONSTANT 1975 DOLLARS
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Even without S0? control on existing plants, there
will be a substantial rise in consumer charges and operating
revenues in constant dollars (about 15.5 percent) in the per-
iod 1976 to 1980. This will be due to the increase in fuel
prices and new plant construction costs over and above the
rate of inflation, and to the construction of other pollution
control equipment required by existing regulations.
AVERAGE RESIDENTIAL ELECTRIC BILL
To put the increases in consumer charges and oper-
ating revenues due to SC> control in another perspective, the
impact on the average residential customer's monthly bill has
been calculated. To perform this calculation, some assumptions
were made:
Average electricity usage per residential
customer will increase at an annual rate
equal to the projected average annual
rate in the East North Central Census
Region (3 percent per year between 1976
and 1980 and 2.5 percent per year be-
tween 1981 and 1985).
Residential rates will remain about 50
percent higher than the average rate
per kilowatt-hour.
The average 1976 monthly residential customer elec-
tric bill of $23.55 will increase to $30.33 in 1980 and $37.57
in 1985 without any SO- control expenditure. The revised SCu
regulations would cause the 1980 monthly bill to increase $0.88
(2.9 percent) and the 1985 monthly bill to increase $0.68 (1.8
percent) in constant dollars. The constant dollar increase
would be less in 1985 than in 1980 because capital-related
charges (i.e., interest and depreciation) are fixed in undeflated
dollars and therefore decrease over time in constant dollars.
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OPERATION AND MAINTENANCE EXPENSES
The revised S00 regulations would affect the
&
operating and maintenance expenses of Ohio utilities in
three ways. First, there would be the additional operating
and maintenance expense associated with the operation of the
pollution control equipment. Second, the operation of the
additional capacity built to replace the derated capacity
would increase operation and maintenance expenses. Third,
any premium paid for low-sulfur fuels necessary to comply
with the S00 regulations would be reflected in the operation
^
and maintenance costs.
Figure 4 shows the operation and maintenance ex-
penses per kilowatt-hour sold of each of the investor-owned
utilities in Ohio for 1976, 1980, and 1985. For some com-
panies the cost per kilowatt-hour sold decreased over one or
more of the periods shown. This is due to the addition of
large amounts of nuclear generating capacity in the future.
The nuclear capacity has lower fuel costs than coal capacity,
and this is reflected in Figure 4. (Nuclear capacity does
have a higher initial capital cost than coal capacity which
offsets some of the fuel savings.)
Under the revised regulations the increase in opera-
tion and maintenance expenses due to S02 control on existing
plants ranged from 0 to 3 percent and averaged 1.1 percent in
1980. In 1985 the range of increase was from 0 to 2.3 per-
cent with an average increase of 0.9 percent. Total operation
and maintenance expenses for 1980 and 1985 are projected to
be $2,602 million and $3,377 million, respectively.
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FlGURE 1
PROJECTED OPERATION AND MAINTENANCE COSTS (PER KILOWATT-HOUR)
REVISED S02 REGULATIONS
OHIO VALLEY
ELECTRIC
OHIO POWER
CINCINNATI
ELECTRIC
CLEVELAND
ILLUMINATING
TOLEDO EDISON
OHIO EDISON
DAYTON POWER
ฃ1 IfiHT
COLUMBUS &
OHIO ELEC-
TRIC
1976 - IR.K KFY:
1980- .- HlO.O | InA-r, inc ciiArcc-
iqor . Tl,, - 1 JBAoCLINL CHARGES
g[gjS02 CHARGES
1976. .-. - h?_ 7
,1980 - . [b.7
1985- ' - |iq T,
1976 s hs.fi
1980 . Hifi.q
1985 - . - ... ; [Jig.i
1976 17 ^
1980 | 13.6
1935 !งi7 ^
1976 18.5
1980 . ' ! 17.fi
1985 . n lf^
1976 - " 13 n
1980 |!J7n a
1985 . . : - lfiis.7
1976 . : 1J} c
1980 : lliq.q
1985 . -1177.3
1976 ' iq.o
1980 - . ||?0.1
1985 . IB 77. 3
Illlllllll1!!!!*'! |!l
-------
-21-
CAPITAL EXPENDITURE REQUIREMENTS
While the impact of the revised S02 regulations on
the Ohio electricity consumer is most clearly shown by the
change in consumer charges, the impact on the electric utility
industry is most evident in the increase in capital expendi-
ture requirements.
Figure 5 shows each investor-owned utility's capital
expenditures for the period 1976-1979. (Since the revised
S00 regulations require compliance prior to the end of 1979,
ฃ4
it has been assumed that all capital expenditures made in
compliance with the regulations will be made prior to 1980.)
The expenditures shown as being required for the SO2 regula-
tions consist of expenditures for pollution control equipment
(scrubbers, precipitators, blending equipment, etc.) as well
as for replacing capacity which was derated as a result of
the installation of the pollution control equipment or the
use of low sulfur coal.
As a percent of other capital expenditures, the
S02 expenditures range from 0 to 23 percent across utility
systems and average 10.6 percent. During that period, the
total capital expenditures for all companies will be $5,031
million for non-SO0 items and $542 million for S00 control.
^ ^
Figure 6 shows the level of these expenditures by
year. The revised S00 regulations would cause an increase
ฃ*
in capital expenditures for the years 1976, 1977, 1978, and
1979 of 6.1, 12.4, 15.2, and 7.5 percent, respectively.
-------
-22-
FlGURE 5
PROJECTED CUMULATIVE CAPITAL EXPENDITURES
JANUARY 1. 1976-DECEMBER 31, 1979
REVISED S02 REGULATION
S(>2 EXPENDITURES
68.0
72. S?
fik
202. C[
68.4
71.2
21
38
1 > ! i
3.0
"*3
ซ' ^
fnปtn
.**ฃu]
'i
4
KaiU
Sltttf
Wlj
"kwS
J
M
t<
5i
OTHER EXPENDITURES
OHtฐ ico c
VALLEY 168.5
KPY. S02 CONTROL
\ (BASELINE EXPENDITURES
| | TSP I WATER EXPENDITURES
E2Si SO? EXPENDITURES
: OHIO POWER ./ i)i)7.5 15.2
CINCINNATI GAS 3, ELECTRIC 657.0 . H-0
] CLEVELAND ELECTRIC & ILLUMINATING 879.3 ^'ฎ
'. TpUEDO EDISOM 507.0 11-6
. ' OHIO EDISON ''.. 1,23^.3 5.8
DAYTON POWER & LIGHT
571.7 3.7
COLUMBUS & SOUTHERN-
OHIO ELECTRIC
535.4 7.2
, |>! I 1 1 I 1
100
200
200 400 600 800 1,000 1,200 1,400
MILLIONS OF CONSTANT 1975 DOLLARS
-------
-23-
FI CURE 6
PROJECTED ANNUAL CAPITAL EXPENDITURES
OHIO INVESTOR-OWNED ELECTRIC UTILITIES
REVISED S02 REGULATIONS
S02 EXPENDITURES OTHER EXPENDITURES
c
163
216
ป7
j
107
1 I
**!
.
1976
919
1977
rcHLtMl INCREASE
TOTAL DUE TO
EXPENDITURES S02 CONTROL
976 6.1
L317 1,480 12.it
1978
1,120 1,636 15.2
1979
f
|
1,425 1,532 ' 7.5
I
1,000 500 0 500 1,000 1,500
MILLIONS OF CONSTANT 1975 DOLLARS
KEY:
["" \ BASELINE EXPENDITURES
| | TSP & WATER EXPENDITURES
ES3 S02 EXPENDITURES
-------
-24-
EXTERNAL FINANCING REQUIREMENTS
The impact on external financing requirements, that
is, the amount of capital which must be raised through the
issuance of debt or stock closely parallels the impact of the
S02 regulations on capital expenditures.
The cumulative external financing requirements for
the period 1976-1979 for each Ohio investor-owned utility are
shown in Figure 7. The annual level of combined external
financing requirements for all the utilities is shown in
Figure 8. The revised S00 regulations would cause an in-
^
crease in external financing requirements for the years 1976,
1977, 1978, and 1979 of 10.0, 15.0, 20.2, and 5.1 percent,
respectively. The total external financing requirements for
the period 1976-1979 are $3,938 million for non-S02 items
and $497 million for S02 control.
To determine the ability of Ohio investor-owned
utilities to finance the S02 removal equipment required by
the revised regulations, each utility's capacity for issuing
additional long-term debt and common equity was examined.
While a utility's ability to raise capital is dependent on
many factors, this analysis focused on two of the more im-
portant factors: debt coverage ratios and market-to-book
stock price ratios. These two ratios, while somewhat limited,
provide the best direct indications of a utility system's
4
financing strength.
For a fuller discussion of coverage ratios and market-to-book ratios,
see the report prepared by TBS for EPA, Economic and Financial Impacts
of Federal Air and Water Pollution Controls on the Electric Utility
Industry,, May 1976, pages IV-71 to 78 and IV-121 to 127.
TBS
-------
-25-
FlGURE 7
PROJECTED CUMULATIVE EXTERNAL FINANCING REQUIREMENTS
JANUARY 1, 1976-DECEMBER 31, 1979
REVISED S02 REGULATION
S02 FJNANCIN6 OTHER FINANCING
0
59.9
65.9
0
isi.g ;
61.0
65.5
kUr
19.1
i
35.1
I , I I !
OHIO 1(1(1 7
VAU.E"
..-'- OHIO POWEft
' CINCINNATI GAS
&. ELECTRIC
KEY: SO? CONTROL
L-"V.J BASELINE FINANCING
C! | TSP S WATER FINANCING
ESI S02 FINANCING Q.O
W2.3 13.5
468.5 W.l
'.I CLEVELAND ELECTRIC '. cyr -r 97 ,.
' : & ILLUMINATING \>u>J LI ,H
TOLEDO ฃ0t SOW
154.3 13.1
OHIO EDiSQN ; 915.8 7.2
; BAYIOD POWER
... ฃ LISHT.
139.1 1.1
COLUMBUS S SOUTH- 7qo 0 o o
ERN OHIO ELECTRIC J3l3lฐ 0>0
! ! 1 1
1111,11
100 300 200 100 0 100 200 300 100 500 600 700 800 900 1,000
MILLIONS OF CONSTANT 1975 DOLLARS
-------
-26-
FlGURE 8
PROJECTED ANNUAL EXTERNAL FINANCING REQUIREMENTS
OHIO INVESTOR-OWNED ELECTRIC UTILITIES
REVISED S02 REGULATIONS
S02 FINANCING OTHER FINANCING
c
162
215
7 j
:SSฃt
t^i*7
63
I 1
1
1976 574
1977'-.
1978
1979 ' "
,
PERCENT INCREASE
TOTAL DUE TO
FINANCING S02 CONTROL
631 10.0
1,076 1,238 15.0
1,063 1^278 20.2
. 1,225 L288 5.1
I !
LOOO 500 0 500 1,000 1,500
MILLIONS OF CONSTANT 1975 DOLLARS
KEY:
{ jBASELINE FINANCING
| [ TSP & WATER FINANCING
S02 FINANCING
-------
-27-
The coverage ratio is a measure of a company's
capacity to raise additional long-term debt. It is the ratio
of net earnings before interest, and taxes to long-term debt
interest, and must legally be at or above a prespecified level
for a utility to issue additional long-term debt. For the
Ohio utilities, that level is set at 2.0 in the Indenture
Agreements for their outstanding bonds.
The market-to-book ratio, on the other hand, is a
measure of a company's ability to sell common stock at an
economic price. When the market price of stock falls below
the book price, (i.e., market-to-book ratio below 1.00)
sales of additional common stock dilute the holdings of
existing stockholders. For that reason selling common stock
below book value is undesirable to the stockholders and
avoided by the companies as much as possible.
In this analysis the present coverage ratios, bond
ratings, and market-to-book ratios were obtained in order to
assess each company's current financial strength. In addi-
tion, the future prospects for each company were estimated
by computing coverage ratios for the years 1976-1979 on the
basis of the projections described earlier. Those computations
were performed under several different assumptions: first,
for the baseline case; second, including the additional ex-
penditures required to meet the revised regulations financed
with the company's baseline mix of debt and equity; and third,
including the additional expenditures financed completely with
debt (because for some companies the increased expenditure is
small relative to other expected financing). All of these
computations were based upon the companies' historical rates
of return on equity for the 1972-1975 period in order to be
-------
-28-
conservative. These current and projected figures then
served as indicators of each company's financial position
and were the basis for the conclusions described below.
Although the revised S00 regulations would increase
^j
the capital expenditures and external financing requirements
of seven of the eight investor-owned utilities studied (Ohio
Valley Electric would not be affected), five of those seven
should experience little or no difficulty in raising the cap-
ital required. Those five are:
Cincinnati Gas and Electric
Cleveland Electric Illuminating
Columbus and Southern Ohio
Dayton Power and Light
Toledo Edison
These companies are now, and are projected to be,
in a financial position which should enable them to finance
the required SOg equipment by issuing additional long-term
debt and/or common equity. Each is discussed briefly below.
Cincinnati Gas and Electric appears to be able to
issue additional debt to cover its S02~related external financing
requirement of $65.9 million. Based on the financial projec-
tions made in the study, t.he company's coverage ratio of 2.8
(October 1975) will decline somewhat by 1979, even in the ab-
sence of the SOg expenditures, because interest rates are
expected to remain high for utilities. Even so, its coverage
ratio is not expected to drop below 2.3 by 1979. The additional
-------
-29-
debt required by the S00 expenditures would only account for
ฃj
another drop of 0.05, so debt financing could be expected to
be available. With a current Moody rating of Aa, the bonds
should also carry reasonable interest rates. In addition,
financing part of the expenditures with equity would also
seem feasible, with the stock currently selling slightly
higher than the last reported book value of $17.75 (December
31, 1975).5
Although Cleveland Electric Illuminating has the
largest S02 expenditures of the Ohio utilities, $202 million,
it also appears to be in a position to finance them through
a combination of long-term debt and equity. Cleveland's
high coverage ratio (3.2 as of September 30, 1975) is projected
to remain above 3.0 from 1976 to 1979, before considering
the S02 expenditures. Even when the S02 financing is included
at the company's baseline mix of debt and equity, the coverage
ratio should not drop below 2.8 in that period, keeping the
company comfortably above the minimum ratio of 2.0. In addi-
tion, the company's current bond rating of Aa (Moody's) and
relatively high average rate of return on equity (14 percent
in the 1972-1975 period) enhance its ability to issue addi-
tional debt. Cleveland's current common stock price of $28.50
(August 26, 1976) is above its 1975 year-end book value of
$24.29, which makes equity financing appear feasible as
well.
Columbus and Southern Ohio's coverage ratio of 2.6
(September 1975) is not projected to fall below 2.4 in any
year during the 1976-1979 period, in the absence of the S02
This and all subsequent book values of stock were obtained from Solomon
Brothers> "Eleotrio Utility Common Stook Market Data," May 1976.
-------
-30-
expenditures. The S02-related external financing requirement
of $35.1 million for this period should not lower the coverage
ratio by more than 0.09 even assuming the financing was
completely with long-term debt. Equity financing also appears
feasible, assuming the current market price of stock is main-
tained. The market price is now $24.38, virtually equal to
the 1975 book value of $24.31.
Dayton Power and Light's mid-1975 coverage ratio of
2.7 is expected to drop to about 2.15 by 1979, before consid-
ering SO2 expenditures. While this would indicate that Dayton
Power and Light is reaching the limits of its debt capacity,
the relatively small amount of financing needed for SO0 equip-
^j
ment, $19.4 million, should have no appreciable impact on the
company's coverage ratios. The system's baseline financing
requirements, by comparison, are projected to be $439 million
in the 1976-1979 period. Dayton Power and Light's common
stock is currently selling for slightly more than its 1975
book value of $18.15, which would indicate that if the price
of the stock does not decrease, equity financing is feasible.
Toledo Edison's year-end 1975 coverage ratio of 2.35
is projected to hit a low of 2.25 in 1977 and then increase
to 2.6 by 1979. Even if the SOg financing requirements of
$61 million are assumed to be financed entirely with debt,
that coverage ratio should not decrease by more than about
0.1, indicating that debt financing seems available to the
company. It would also appear feasible to provide some of
the financing in the form of common equity if the current
stock price is maintained. The 1975 book value of stock is
$22.39, and the current market price is $24.00.
TBS
-------
-31-
Two of the Ohio utilities, Ohio Edison and Ohio
Power, might have difficulty in financing the S02-related
capital expenditures. Both companies have coverage ratios
near 2.0, and are not projected to improve this ratio sub-
stantially by 1979.
While Ohio Edison's ability to raise additional
debt financing may be limited, the amount required for S00
^
equipment, $65.5 million, is small in comparison to its other
financing needs for 1976-1979 of $915.8 million. If it is
not possible to obtain sufficient additional debt financing
for the SO2 equipment, a major portion of the financing
appears possible with common equity. Ohio Edison's common
stock is currently selling well above its 1975 book value of
$15.39. Assuming the market price of $18.13 (August 26, 1976)
holds, equity financing would appear to be feasible. Addi-
tional common equity on the order of $65.5 million over a
four-year period would not significantly alter the capital
structure of this company, whose capitalization exceeds
$1.6 billion. Alternatively, in light of the magnitude of
its baseline capital expenditure program, it seems possible
that Ohio Edison could reschedule its other capital expen-
ditures in order to free up financing for some or all of
the SOg equipment.
Ohio Power's financing difficulties appear to be
the most severe of the Ohio utilities. While the amount
of SOo-related financing in relationship to other financing
requirements is almost the same as for Cincinnati Gas and
Electric and Toledo Edison, Ohio Power's financial condition
is much more constrained. With a Moody's rating of Baa and
future financing requirements which should keep the coverage
-------
-32-
ratio very close to 2.0, Ohio Power's ability to raise addi-
tional debt is extremely limited. As in the case of Ohio
Edison, however, equity financing could offer a possible
solution. American Electric Power, which owns Ohio Power,
had a market-to book ratio of 1.03 in May 1976. Since then
the stock price has increased slightly. One cannot guarantee
the continuation of that level, but at this point it does
appear possible to finance the S02 expenditures in whole or
in part through common equity.
A recent development which is not reflected in this
analysis is Ohio Power's recent announcement of the pending
closure of two power plants. If that happens and the cost
of installing S00 equipment at those two plants is excluded,
^
the company's S02 expenditures will decrease from $68 million
to about $5 million. Even in its current financial condition,
Ohio Power can reasonably be expected to be able to finance
that reduced level of expenditures.
The financial indicators on which the above analyses
were based, coverage ratios and market-to-book stock price
ratios, are sensitive to changes in a number of factors. A
significant change in any one of them could alter the conclu-
sions above. These factors include:
realized rate of return on common equity,
market price of common stock,
long- and short-term debt interest rates,
capital project construction schedules, and
addition and elimination of capital construction
projects.
TBS
-------
-33-
IMPACTS ON MUNICIPAL AND COOPERATIVE UTILITIES
Due to the small size of the individual municipal
and cooperative utilities in Ohio, it is difficult to make
projections of their future operating and financial condition
with a high degree of accuracy. A number of strategic assump-
tions must be made when analyzing the effect of the S02 regu-
lations on them. These assumptions are based on historical
data and may or may not prove to be true in the future. The
assumptions used in this analysis are:
The municipal and cooperatives maintain their
1974 share of total generation (4.2 percent)"
and portion of purchased power (13.4 percent)
in the future.
The increase in average consumer charges
(aside from that which arises from the S02
regulations) is at the same rate as for
the investor-owned utilities.
The price the municipals and cooperatives pay
for purchased power increases at the same
rate as investor-owned utilities' generating
costs when S02 control is included.
Approximately 70 percent of the capital
which would be required to meet the S02
standards is financed externally.
The major effect of the revised S02 regulations on
the municipal and cooperative utilities is an increase in
capital expenditures between 1976 and 1979 of $24.1 million
and about $3.2 million a year in increased operating and
/
The historic data used for the municipal and cooperative utility
analysis were obtained from the 1974 Statistical Year Book, published
by the Edison Electric Institute, and the National Coal Association 's
1974 Steam Plant Factors.
-------
-34-
maintenance expenses after 1979. On an annual basis, this
amounts to an increase in operating costs of $5.75 million.
In 1980 and 1985 municipal and cooperative generation is es-
timated to be 7,258 and 9,177 million kilowatt-hours, respec-
tively. The average cost per kilowatt-hour sold is estimated
to be 26.85 mills in 1980 and 30.13 mills in 1985, without any
SO0 control. The increase in cost due to SO0 control would
ฃt ฃt
be 0.79 (2.9 percent) in 1980 and 0.63 mills (2.1 percent) in
1985.
In the absence of SO2 control, the average monthly
residential bill is estimated to be $22.60 in 1980 and $28.00
in 1985. The increase in the average monthly bill due to S02
control would be $0.66 per month in 1980 and $0.58 per month
in 1985.
IrlBlsl
-------
-35-
CHAPTER 4
FINANCIAL IMPACT OF THE
ORIGINALLY PROPOSED SULFUR DIOXIDE REGULATIONS
The impacts of the originally proposed sulfur di-
oxide regulations on the Ohio electric utility industry and
its customers will be covered briefly in this chapter. Since
the areas of impact were explained in Chapter 3 and apply
here, only the actual numeric impacts will be discussed.
CONSUMER CHARGES AND OPERATING REVENUES
Figure 9 shows the increase in consumer charges (in
constant 1975 dollars), for each of the eight investor-owned
utilities studied, for the years 1976-1980 and 1985. In 1976
the impact of the revised S02 regulations would have been
hardly measurable. The effect would have been most pronounced
in 1980, ranging across utility systems from an 0.9 to an
11.3 percent increase in consumer charges and averaging 7.9
percent. By 1985 the effect of the S02 regulations as a
percent of consumer charges would have decreased due to the
increase in consumer charges from the construction of new
plants and increased fuel prices, except for slight variations
due to rounding error.
Figure 10 shows the operating revenues for each com-
pany for the same periods covered by Figure 9. The increases
due to SO0 control on a percentage basis are the same as for
ฃt
consumer charges.
TBS
-------
-36-
FIGURE 9
PROJECTED CONSUMER CHARGES FOR ELECTRICITY
ORIGINAL PROPOSED S02 REGULATIONS
OHIO VALLEY
ELECTRIC
OHIO POWER
CINCINNATI
GAS &
ELECTRIC
:LEVELAND
ELECTRIC &
ILLUMINATING
'OLEDO EDISON
HIO EDISON
lAYTON POWER
& LIGHT
;OLUMBUS S
SOUTHERN
OHIO ELEC-
PERCENT INCREAS
SO? CONTROL
1976 .... 19.9 ^ n.n
,agn Ill K 1 BASELINE CHARGES * ' '
lyoU . , 1111. 0 ,,.-rrr, nrr-m nnriM 0 , Q
'1rior ป. r I 1 S>P AND WATER REGULATION UlJ
1985.,.: : .1112.5 1 1 rH/vpr.e<; 09
fell S02 REGULATION CHARGES
1976 ' ' |19.8 0.3
1980 F&l.S 7.2
1985 : ' Il22,6 t.5
'
1976 .. .- |28.2 0.4
1980 . . - .. ItrSSSiSl.s 11.2
1985 itTjSG.S 6.4
1976 128.2 0.3
I9SO - - lฃElฃ336.8 11.3
1985 ...:.. 1^338,3 7.2
1^76 ' ' |31.0 0.2
J980 '" IEO37.8 6.7
mS 1339.5 3.4
lb'7& . . 129.6 0.3
J98Q - f;^S40.5 10.5
1935 ILH^.O 6.5
1C>?6 131.4 0.1
MO - ' | E337.0 4.0
1935 --.:.- | 042.4 2.2
197G ' J31.6 0.0
1980 . | |;J40.0 3 3
1985 ^44.5 2.0
ljll!!ll!l!!ll|ll|i|l!ll !|!ll|ilil!ll|lll! 1 ! ^ ' 1 .i J
D 5 10 15 20 25 30 35 40 45 50
CONSTANT 1975 MILLS PER KILOWATT-HOUR SOLD
-------
-37-
FlGURE 10
PROJECTED REQUIRED ELECTRIC OPERATING REVENUES
ORIGINAL PROPOSED S09 REGULATIONS
OHIO VALLEY
Ft FPTP T T
OHIO POWER
CINCINNATI
ELECTRIC
CLEVELAND
ELECTRIC &
ILLUMINATING
TOLEDO EDISON
OHIO EDISON
DAYTON POWER
COLUMBUS &
SOUTHERN
OHIO ELEC-
TRIC
PERCENT INCREASE DUE T(
KEY: so2 CONTROL
1 j BASELINE REVENUES
1976 J181.9 ( ( TSP & WATER REVENUES 0.0
1980 , 1210.9 ES3| so? REVENUES O.q
1976 ...: : : : . .. n 344.3 0.3
1980 . IEJl.128.5 7.1
1985 . . IE! 1,422. 8 4.5
1976 - 9 363.3 n.4
1980 IO571.6 11.9
-1985.. .- '.. ' . ' -IS1843.4 6.4
1976 | if81.3 0.3
J980 . 11^805.1 11.3
1985 !Et^ 1,076.7 7.7
J976 ) 224.0 n.9
1980 | 335.2 6.6
1985 . i 486. 9 3.4
1976 -. | 546.8 0.3
193Q CT921.9 10.5
1985 . . . IEHl.256.8 6.5
1976 I286.S 0.1
1980 I342E.3 . 4.n
1985 || 653.9 2.2
1976 J255.8 n.fi
]S8Q 11415,7 3.3
J985 .. ' ' i 1 622.1 9,n
1 1 i 1 i 1 1 i I i I i I L I
200 400 600 800 1,000 1,200
MILLIONS OF CONSTANT 1975 DOLLARS
1,400 1,600
-------
-38-
AVERAGE RESIDENTIAL ELECTRIC BILL
The average 1976 monthly residential customer elec-
tric bill of $23.55 will increase to $30.33 in 1980 and $37.57
in 1985 without any S02 control expenditure. The original
S02 regulations would have caused the 1980 monthly bill to in-
crease $2.40 (7.9 percent) and the 1985 monthly bill to increase
$1.83 (4.9 percent) in constant dollars. The constant dollar
increase is less in 1985 than in 1980 because capital-related
charges (i.e. , interest and depreciation) are fixed in unde-
flated dollars and therefore decrease over time in constant
dollars.
OPERATION AND MAINTENANCE EXPENSES
Figure 11 shows the operation and maintenance ex-
penses of each of the investor-owned utilities in Ohio for
1976, 1980, and 1985, per kilowatt-hour sold. For some com-
panies the cost per kilowatt-hour sold decreased over one or
more of the periods shown. This is due to the addition of large
amounts of nuclear generating capacity in the future. The
nuclear capacity has lower fuel costs than coal capacity, and
this is reflected in Figure 11. (Nuclear capacity does have
a higher initial capital cost than coal capacity which offsets
some of the fuel savings.)
The increase in operation and maintenance expenses
due to SOQ control on existing plants would have ranged between
^j
0.7 and 8.6 percent and would have averaged 3.2 percent in 1980.
In 1985 the range of increase would have been from 0.5 to 4.6
with an average increase of 2.6 percent. Total operation and
maintenance expenses for 1980 and 1985 would have been $2,656
million and $3,432.6 million, respectively.
TBS
-------
-39-
FlGURE 11
PROJECTED OPERATION AND MAINTENANCE COSTS (PER KILOWATT-HOUR)
ORIGINAL PROPOSED S02 REGULATIONS
OHIO VALLEY
ELECTRIC
OHIO POWER
CINCINNATI
GAS 8
ELECTRIC
CLEVELAND
ELECTRIC &
ILLUMINATING
TOLEDO EDISON
OHIO EDISON
DAYTON POWER
& LICHT
COLUMBUS &
SOUTHERN
OHIO ELEC-
TRIC
1976 18.6
1980 ilin.l
1985 ... [hl.fi
1976 ; .'119.9
1980 1113.8
1985 ' ; . IT
1976 ' - - ' . 1 T
1980
1985
KEY:
[ /I BASELINE CHARGES
I j TSP AND WATER CHARGES
JSSl S02 CHARGES
5,5
5J
a 17.?.
Iiq.5
1976 - J17 T,
1930
319.1
1985 IS 17. 7
197o
1980
1985 g
118.5
_J 17.6
16.3
1976 - 11*3.1.
1980 - ltS|?l 9
.19.85 . IB iq.9
1976
1980
1985 '
118.6
Ifeo.o
1^22.3
197&
1980
1985
lllll'll'l1'1!!1
D 5 10 15
119.0
1^20.1
"'1122.5
II
20 25
PERCENT INCREASE DUE TO
SO; CONTROL
(To
0.7
0.5
0.0
1.5
1.3
0.0
5.1
2.6
0.0
5.2
H.6
0.0
2.9
2.3
0.0
8.6
3.7
0.0
0.9
1.5
0.0
3.2
2.2
CONSTANT 1975 MILLS PER KILOWATT-HOUR SOLD
-------
-40-
CAPITAL EXPENDITURE REQUIREMENTS
Figure 12 shows each investor-owned utility's capital
expenditures for the period 1976-1979. (Since the original
SO0 regulations would have required compliance prior to the
ฃ
end of 1979, it has been assumed that all capital expenditures
made in compliance with the regulations would be made prior to
1980.) The expenditures shown as being required for the S02
regulations consist of expenditures for pollution control equip
ment (scrubbers, precipitators, blending equipment, etc.) as
well as for replacing capacity which was derated as a result
of the installation of the pollution control equipment or use
of low sulfur coal.
As a percent of other capital expenditures, the
u
expenditures would have ranged from 5.6 to 86.0 percent across
utility systems, and averaged 29.1 percent. During that period,
the total capital expenditures for all companies would have
been $5,081 million for non-S02 items and $1,480 million for
S02 control.
Figure 13 shows the level of these expenditures by
year. The original S02 regulations would have caused an in-
crease in capital expenditures for the years 1976, 1977, 1978,
and 1979, of 16.7. 33.8, 41.6, and 20.5 percent, respectively.
EXTERNAL FINANCING REQUIREMENTS
The cumulative external financing requirements for
the period 1979-1979 for each utility are shown in Figure 14,
and the annual level of combined external financing requirements
for all the investor-owned utilities in Ohio is shown in Figure 15,
TBS
-------
-41-
FlGURE 12
PROJECTED CUMULATIVE CAPITAL EXPENDITURES
JANUARY 1, 1976-DECEKBER 31. 1979
ORIGINAL PROPOSED S02 REGULATION
S02 EXPENDITURES
385.0
315
364.)
1
i
tr* ,
23C
.8
1
1.5
t "
a^i.*."
\
9
wsrww.
.5
- ';
79.1
62.0
33.4
I 1 i
.1
Ut
-^.j-.i-i-.-u-i-T-r- - r""1 "1 nA^n TWF rYprun ITIIRF^
VALLEY 16S 5 ~ "1 TSP & WATER EXPENDITURES 5^
tSiiSS sn.. EXPENDITURES
:.:X; OHIO POWER : 447.5 86,0
^CINCINNATI GAS 5 ELECTRIC 657.0 35.1
''I 'CLEVELANP ELECTRIC 8 ILLUMINATING ; 879.3 35.9
;:" 'TOLEDO EDISOK 587.0 13.5
.;'.: . " OHJO EDISON . 1,234.3 29,5
DAYTON POWER & LIGHT 571,7 10.8
COLUMBUS ฃ SOUTHERN
J OHIO ELECTRIC 535.4 O.Z
III 1 1 1 1 1
400
200
200 400 600 800
MILLIONS OF CONSTANT 1975 DOLLARS
1,000 1,200 1,400
-------
--42-
FlGURE 13
PROJECTED ANNUAL CAPITAL EXPENDITURES
OHIO INVESTOR-OWNED ELECTRIC UTILITIES
ORIGINAL PROPOSED S02 REGULATIONS
S02 EXPENDITURES OTHER EXPENDITURES
154 []
445
590
291
1 1
1976 . ". 919
1977
1978
PERCENT INCREASE
TOTAL DUE TO
EXPENDITURES S02 CONTROL
1,073 16.7
1,317 1,762 33.8
1,420 2,010 41.6
1979
1,425 1,716 20.5
1 f |
1,000 500 0 500 1,000 1,500
MILLIONS OF CONSTANT 1975 DOLLARS
KEY:
LI BASELINE EXPENDITURES
I I TSP 8 WATER EXPENDITURES
fcTyl S02 EXPENDITURES
-------
-43-
FlGURE 14
PROJECTED CUMULATIVE EXTERNAL FINANCING REQUIREMENTS
JANUARY L 1976-DECEMBER 31,1979
ORIGINAL PROPOSED S02 REGULATION
S02 FINANCING OTHER FINANCING
8.5
352.6[^3T?.-
208.9
286.1
69.1
333.6 . ,
56.9
30.l[
(ill
OHIO ijij. 7
v/ALLE L^>/
V.OHIO POWER
CINCINNATI GAS
':: . & ELECTRIC
KEY: so2 CONTROL
{:'.".'. 1 BASELINE FINANCING
| | TSP & WATER FINANCING
|gฃig S02 FINANCING 5^
442.3 79.7
468.5 44.6
-':'.': '' CLEVELAND ELECTRIC eye 7 JiO h
--'' & ILLUMINATING vu>J -ซ..n
TOLEDO SDtSON
454.3 15.2
;...:':' . . OHIO EBISON 915.8 36.4
"": 5ftTION POWER' '
V': ; ^ L3C-HT
439.1 13.0
COLUMBUS S SOUTH- ?qo o 71:
ERN OHtO ELECTRIC 3'c> ' >y
1 I 1 1
1 i \ > 1 ' 1 J. ' ' I
400 300 200 100 0 100 200 300 400 500 600 700 800 900 1,000
MILLIONS OF CONSTANT 1975 DOLLARS
-------
15
PROJECTED ANNUAL EXTERNAL FINANCING REQUIREMENTS
OHIO INVESTOR-OWNED ELECTRIC UTILITIES
ORIGINAL PROPOSED S02 REGULATIONS
S02 FINANCING OTHER FINANCING
PERCENT INCREASE
154
140
578
" --. in IT,..
175
!*..'
1 1
' IUIAL DUE TO
FINANCING SOj CONTROL
1976 574 728 26.9
1977 1,076 1,516 40.9
1978 1,063 1,641 54.3
1979 1,225 1,400 14.2
1 \ I
1,000 500 0 500 1,000 1,500
MILLIONS OF CONSTANT 1975 DOLLARS
KEY:
1. . ;;;) BASELINE FINANCING
f I TSP 8 WATER FINANCING
ESSS S02 FINANCING
-------
-45-
The original S00 regulations would have caused an increase in
^
external financing requirements for the years 1976, 1977, 1978,
and 1979 of 26.9, 40.9, 54.3, and 14.2 percent, respectively.
The total external financing requirements for the period 1976-
1979 would have been $3,938 million for non-S02 items and
$1,347 million for S00 control.
TBS
-------
-46-
APPENDIX A
SUMMARY OF FINANCIAL DATA
The following tables give all the financial data
used in developing the conclusions of this report. Each of
the investor-owned utilities in Ohio was modeled four times
BaselineExcludes all expenditures for
pollution control equipment (PCE) on existing
power plants in Ohio. Includes all other
planned expenditures on plant and equip-
ment including PCE expenditures on existing
plants outside Ohio and new plants.
TSP & WaterExcludes all PCE expenditures
for S02 removed on existing plants. In-
cludes Baseline plus PCE expenditures for
meeting particular (TSP) regulations and
effluent guidelines on existing plants and
all PCE expenditures on new plants. PCE
costs for TSP and water were provided by
the EPA.
Revised S02 RegulationIncludes costs of
complying with the revised S02 regulations
in addition to the Baseline and expendi-
tures to meet the TSP and water regulations.
Original SO? RegulationsIncludes costs of
complying with the original proposed SO2
regulations in addition to the Baseline
and expenditures to meet the TSP and water
regulations.
The column headings are defined as follows:
CAP EXPCapital expenditures: Annual cash
outlays made for plant and equipment (in-
cluding construction work in progress) plus
allowance for funds used during construction
(millions of 1975 dollars).
TBS
-------
-47-
EXT FINExternal Financing: Annual amount
of funds which must be raised in financial
markets through issuance of long-term debt,
preferred stock, common stock, and short-
term debt (millions of 1975 dollars).
OPER REV--Operating Revenues: Annual revenues
required by operating and maintenance costs,
fuel costs, interest charges, depreciation
charges, and income and property taxes (mil-
lions of 1975 dollars).
O&M EXPOperating and Maintenance Expenses:
Annual operating and maintenance expendi-
tures including fuel costs (millions of 1975
dollars).
CONS CHRGConsumer Charges: Average cost (in
1975 mills) of electricity per kilowatt-hour
sold. Determined by dividing annual operating
revenues by the total kilowatt-hour sales for
the year.
TBS
-------
-48-
APPENDIX A
SUMMARY-OF FINANCIAL DATA
CINCINNATI GAS & ELECTRIC COMPANY
Baseline
EXT
FIN
1976
1977
197B
1979
1980
1981
1982
1983
1984
1985
TSP &
I97b
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
73.60
152.33
181.64
191 .90
185.99
195.19
212.06
217.25
210.31
255.98
Water
CAP
EXP
79.62
169.68
204.54
203.16
185.99
195.19
212.06
217.25
210.31
255.98
27,
107,
,08
,44
142.32
139.03
123.15
126
150
151
126
,49
,54
,69
,94
173.41
33
124
164
146
EXT
FIN
,05
,57
,67
.17
119.95
123.46
147.69
149.00
124.40
171.00
OPER
REV
361 ,
385,
413,
442,
61
09
65
20
500.59
544.45
593.03
642.50
729.32
780.42
OPER
REV
361
386,
416,
450
95
31
02
37
514.13
557.50
605.60
654.59
742.11
792.74
201 ,
215,
232,
238
0>M
EXP
11
66
47
42
264.58
286,
312,
339,
372,
11
06
31
10
401 .90
201 ,
215
232
241
0 + M
EXP
11
66
47
36
267.56
289,
315,
342
375,
11
09
37
18
405.11
Note: All figures ~in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG)3 which are in mills per
kilowatt-hour.
CONS
CHRG
28,
27,
28,
28
30
30
31
31
33
10
80
11
36
14
92
54
99
94
34.04
CONS
ChRG
28.13
27.89
28.27
28.88
30.95
31.66
32.21
32.59
34.54
34.57
-------
-49-
CINCINNATI GAS & ELECTRIC COMPANY (cON'l)
Revised S00 Regulation
OPER
REV
362.38
387.85
419.00
459.81
530.21
572.88
620.27
668.57
756.91
806.76
I97b
1977
I97d
1979
1980
1981
1982
1983
198^
1985
^
CAP
EXP
87.20
191 .57
233.42
217.36
185.99
195.19
212.06
217.25
210.31
255.98
EXT
FIN
40.58
146.17
192.85
154.75
115.52
1 19.28
143.74
145.27
120.89
167.69
201
215
232,
243
270,
291,
317,
344,
377,
0 + M
EXP
11
66
47
86
10
67
66
95
77
407.79
CONS
CHRG
28.16
28.00
28.47
29.49
31 .92
32.54
32.99
33.29
35.22
35.19
Original S09 Regulation
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
103.72
239.22
296.29
248.28
185.99
195.19
212.06
217.25
210.31
255.98
EXT
FIN
56.98
193.20
254.21
173.00
105.45
109.78
134.77
136.81
112.90
160.16
OPER
REV
363.31
391.19
425.49
486.84
571 .63
612.68
658.47
705.20
795.25
843.37
0 + M
EXP
201.11
215-66
232.47
255.16
281 .47
303.09
329.13
356.48
389.34
419.55
CONS
CHRG
28.23
28.24
28.91
31 .22
34.41
34.80
35.02
35.11
37.01
36.78
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-50-
CLEVELAND ELECTRIC ILLUMINATING COMPANY
Baseline
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
130.21
248.10
221.38
237.75
264.92
275.84
290.68
357.05
432.18
455.44
EXT
FIN
69.72
264.98
1^6.41
156.49
201.39
178.07
196.23
272.59
303.11
330.03
OPER
REV
479.45
553.28
617.10
654.65
713.73
764.71
813.93
857.77
946.32
996.68
0 + M
EXP
295.44
328.88
337.94
360 .07
389.72
403.85
416.71
426.34
437.28
447.07
CONS
ChRG
28.10
30.09
31 .57
31 .66
32.65
33.30
33.70
33.82
35.58
35.51
TSP & Water
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
134.57
260.70
238.05
245.96
264.92
275.84
290.68
357.05
432.18
455.44
EXT
FIN
74.05
277.40
162.66
161.18
198.55
175.40
193.71
270.21
300.87
327.92
OPER
REV
479.67
554.06
618.56
660.25
723.23
773.71
822.45
865.82
954.76
1004.58
0 + M
EXP
295.44
328.88
337.94
361.32
391 .00
405.15
418.01
427.65
438.60
448.40
CONS
CHRG
28.12
30.13
31 .64
31 .93
33.09
33.69
34.05
34.14
35.89
35.79
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG)3 which are in mills per
kilowatt-hour.
T
B
S
-------
-51-
CLEVELAND ELECTRIC ILLUMINATING COMPANY
ฃ,
CAP
EXP
1976
1977
1978
1979
19C50
1981
1982
1983
1984
1 985
155,
321*
318*
285*
264.
275 *
290.
35 7 ซ
432*
455.
63
6?
76
73
92
04
68
05
18
44
95
337
241
136
1S7
164
103
260
29:1.
319
EXT
FIN
,00
,58
"7 /
ซ O O
,29
,00
,57
1 !">
, "ป /
,.. _ ,
* v/ /
,78
,35
OPER
KEY
430,75
625,63
633.49
771,13
319.82
(J t.t 1.11 * / v.1
"/ y > 4 o *..
^ *u> *Y / * *'- *
CHM
EXP
295.44
320*00
337.94
370,57
400,66
414,99
427,97
~r >.J .' ป / 3
* A /ซk ". ~J
-r -ป (.* . / /
458*67
CONS
CHUG
> r'< ( r t
.. O ป .1. i.*
,30, o4
A'..
.t'.t
t
..' J
Original S00 Regulation
1976
1977
1978
1979
I960
1981
1983
1983
1984
1985
CAP
EXP
167.48
355.78
363.87
307.96
264.92
275.84
290.68
357.05
432.18
455.44
106,
371,
285,
198,
EXT
FIN
70
22
35
10
178.58
156,
175,
253,
285,
56
94
46
08
313.03
OPER
REV
481 ,
559
629,
711,
35
94
58
79
805.14
852
898
938
1030
47
02
22
59
1076.67
0 + M
EXP
295.44
328.88
337.94
381.02
411.54
426.07
439.20
449.05
460.20
470.19
Note: All figures -in millions of 1975 constant dollars except
Consumer Charges (CONS CURG)> which are in mills per
kiloDatt-hour.
CONS
CHRG
28.21
30.45
32.21
34.42
36.83
37.12
37.18
36.99
38.74
38.36
-------
-52-
COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY
Baseline
CflP
EXP
1976
1977
1978
1979
1980
1981
198ฃ
1983
1984
1985
79
1ฃ6
139
14ฃ
1 39
154
185
190
191
T' ?' -r>
.ฃ9
.43
.68
.76
.64
.95
. 33
.ฃ5
.06
.81
EXT
FIN
55
87
101
110
13ฃ
10ฃ
161
150
168
157
.ฃ6
.93
.97
.55
.08
.60
.96
.38
.73
.05
DPER 0+M
REV
ฃ55
300
331
361
391
4ฃฃ
460
494
560
600
.38
.08
.35
.93
.35
.90
-i --.
ป !' _'
.91
.35
.16
EXP
153
163
18ฃ
190
199
ฃฃ0
C-vl'-J
ฃ56
ฃ73
30ฃ
.68
.74
.68
.58
.68
.18
.09
.93
.4ฃ
.01
cans
CHRG
31
34
36
o r'
37
C* '!
39
39
4ฃ
4ฃ
.53
.81
. 09
. 0 0
.66
.33
.31
.84
.53
.96
TSP & Water
1976
1977
1978
1979
1980
1981
198ฃ
1983
1984
1985
-, -
84
140
158
15ฃ
139
154
185
1 9 0
191
ฃ3ฃ
CFlP
EXP
.19
t'O
.51
. 06
.64
.95
.-,.-,
_' J
.ฃ5
.06
O 1
.0 1
60
101
1ฃ0
116
1ฃ9
100
159
148
166
155
EXT
FIN
.!ฃ
.94
-. '"I
a wi._l
.40
-,*-!
*-
.05
.55
.11
.59
.03
DPER
ฃ55
300
--!- --t
.' - L_
368
40ฃ
433
470
504
570
6 09
REV
.61
.87
.84
-i -.
C.O
.37
.43
.51
ฃ>
-------
-53-
COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY (cON'l)
Revised S00 Regulation
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
A
CAP
FXP
88.19
152.19
173.86
159.64
139.64
154.95
185.33
190.25
191 .06
232.81
EXT
FIN
64.09
113.35
135.29
121.14
127.15
97.95
157.57
146.24
164.83
153.37
OPER
REV
255,
301 ,
334,
374,
443
480
513
580
79
52
06
82
412.74
43
18
94
50
153,
163.
182,
195.
205.
225,
238,
262'
279,
0 + M
EXP
68
74
68
95
18
63
,66
.48
,09
CONS
CHRG
31.58
34.98
36.38
38.32
39.72
40,
41
41
44
19
01
37
06
619.28
307.63
44.33
Original SO^ Regulation
CRP
1976
1977
1973
1979
1980
1981
1982
1983
19S4
1985
1-1 -7
'_' 1
150
171
158
139
154
185
190
191
-I -"I -'I
L_-_'L_
EXP
.66
.67
.84
.64
.64
.95
-i -.
. -' _<
.25
.06
.81
63
111
133
120
127
97
157
146
164
153
EXT
FIN
.57
.84
.31
.ฃฃ
.17
.96
.58
.ฃ6
.84
. 3 8
a PER
REV
ฃ55
301
-i -. -<
j --' -I1
378
415
446
^1 c> -T.
T --
5 1 6
583
6ฃฃ
"-??
f I
.44
.90
-I'll.
.68
.38
.!ฃ
.89
.34
.15
153
163
182
1 99
ฃ 08
ฃฃ9
ฃ42
ฃ66
282
311
DH-M
EXP
.68 '
.74
.68
.48
.71
.17
.ฃ0
. 03
.65
.ฃ0
cnr-i3
CHRG
31
-, 4
1'T
36
"~i i~ i
1ซO
40
40
41
41
44
44
.58
.97
"i -7
. -' 1
.68
. 0 0
.46
.ฃ6
.61
.ฃ8
.53
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-54-
DAYTON POWER & LIGHT COMPANY
Baseline
1976
1977
1976
1979
i960
1981
1982
1983
1984
1985
CAP
EXP
56.12
130.90
161.31
171.58
168.49
177.84
189.24
183.99
168.86
203.99
EXT
FIN
22.60
98.18
141.83
129.10
117.73
152.12
139.62
121.88
108.07
136.19
OPER
REV
286.20
304.46
328.52
358.99
397.74
433.80
473.55
516.06
588.84
629.24
0 + M
EXP
169.41
180.67
196.37
209.65
221.96
237.91
259.17
282.66
309.89
332.64
CONS
CHRG
31 .34
31.51
32.05
33.04
34.52
35.51
36.58
37.59
40.45
40.77
TSP & Water
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
61.50
146.47
181.97
161 .77
168.49
177.84
189.24
183.99
168.86
203.99
27,
113,
162,
135,
EXT
FIN
95
55
02
54
114.79
149,
137,
119
105
35
01
41
74
133.99
OPER
REV
286.49
305.48
330.39
366.29
409.87
445.29
484.43
526.37
599.63
639.54
169,
180
196,
212
0 + M
EXP
41
67
37
32
224.59
240,
261 -
285.
312,
51
77
27
47
335.37
Note: All figures -in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
CONS
ChRG
31
31
32
33
36
37
38
41
,38
,61
,24
,71
35.58
,45
,42
.34
.19
41 .44
-------
-55-
DAYTON POWER & LIGHT COMPANY
Revised S0n Regulation
1976
I97f
1978
197S)
1980
1981
1982
1983
1984
193S
^
CAP
FXP
63.70
152.81
190.39
185.93
168.49
177.84
189.24
183.99
168.36
203.99
EXT
FIN
30.12
119.82
170.24
138.25
113.67
148.29
136.00
1 18.46
104.84
133. 14
OPER
REV
286
305
331
369
414
,61
,69
,16
.33
.90
450.08
489.00
530.71
604.20
643.87
0 + M
EXP
,41
,67
,37
213.53
225.79
169,
180,
196,
241,
262.
286,
313
72
98
48
68
CONS
CHRG
31,
31 ,
32,
33,
36
37
38
41
39
66
31
99
36.01
85
77
66
51
336.60
41 .72
Original SO^ Regulation
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
67.94
165.10
206.69
193.98
168.49
177.84
189.24
183.99
168.86
203.99
EXT
FIN
34.34
131.96
186.17
143.48
111.50
146.24
134.06
116.63
103.11
131.51
OPER
REV
286.84
306.70
332.64
376.86
426.30
461 .02
499.50
540.80
614.72
653.94
0 + M
EXP
169.41
180.67
196.37
217.47
229.73
245.66
266.93
290.44
317.65
340.61
CONS
CHRG
31 .41
31.74
32.46
34.68
37.00
37.74
38.58
39.39
42.23
42.37
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-56-
OHIO EDISON COMPANY
Baseline
1976
1977
1978
1979
1980
1981
1982
1983
198^
1985
CAP
EXP
270.42
264.52
287.25
329.73
349.36
351.55
370.90
433.77
481.28
509.58
EXT
FIN
176.25
205.04
216.83
241.85
297.02
343.42
248.20
299.19
352.50
360.43
OPER
REV
544.52
647.17
691.15
746.05
814.59
876.69
932.04
S>35.66
1099.08
1162.44
0 + M
EXP
339.46
362.24
382.68
420.59
450.64
461 .75
471 .29
478.33
490.38
50 1 .44
CONS
CHRG
29.51
33.20
33.66
34.51
35.79
36.60
37.00
37.24
39.54
39.81
TSP & Water
I97b
1977
I97d
1979
1980
1981
1982
1983
198^
1985
CAP
FXP
278.9^
289.2?
320.12
345.99
349.36
351.55
370.90
433.77
4.= 1.26
509.58
EXT
FIN
184.73
229.49
249.07
252. 4fl
292.63
3^4.31
244.31
295.51
349.02
357.14
OPER
REV
54^.93
648.53
693.46
757.27
834. 17
895.56
950.17
1003.05
1117.48
1 179.97
0 + M
EXP
339.46
362.24
382.68
424.91
655.12
466.27
475.82
482.86
494.94
506.03
CONS
CHRG
29.53
33.27
33.78
35.03
36.65
37.39
37.72
37.89
40.20
40.41
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-57-
OHIO EDISON COMPANY
1976
1977
1978
1979
1980
1901
1982
1903
1984
1905
^,
CAP
EXP
**> r% / **" (
*~ O O + O .1.
310.58
348.54
360,04
349.36
351.55
370.90
433.77
481.23
509.53
EXT
F I N
172.05
250 ซ 63
276 . 95
261. ,63
298,90
' 340.73
240,92
292.30
345.93
354.26
OPER
REV
545,30
649.70
695,^6
763.37
852,40
913.16
967,14
1019,39
1134.63
1196,40
OKI
EXP
339.46
362,24
382.68
429,96
47 I. ,40
430,96
433,01
500,11
5:1 1 ,22
CGN3
CUM
o 0 , 13
33,39
33,51
40., 32
4 0 - 9 6
Original SO^ Regulation
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
316.70
398.62
465.69
417.99
349.36
351.55
370.90
433.77
481.28
509.58
EXT
FIN
222.26
337.77
391 .88
297.48
271.52
324.28
225.35
277.57
332.05
341.08
OPER
REV
546.79
654.56
703.70
808.88
921.95
979.71
1030.68
1079.99
1198.53
1256.79
0ซ-M
EXP
339.46
362.24
382.68
444.09
474.63
485.88
495.48
502.56
514.72
525.89
CONS
CHRG
29.63
33.58
34.28
37.42
40.50
40.90
40.91
40.80
43.11
43.04
\
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-58-
OHIO POWER COMPANY
Baseline
1976
1977
1978
1979
1980
1981
1982
1983
19S4
1985
90
65
107
120
118
122
126
149
226
3.20
CAP
EXP
.65
.36
.38
.67
.47
.20
.06
.04
+ 37
.22
31
9
46
295
25
60
101
132
. 143
231
EXT
FIN
.84
.43
, 1 1
.31
.31
.39
.39
,43
.03
.95
OPER Q-fซ
841
879
928
967
1040
1.109
1188
1270
1317
1348
REV
.56
.13
.4.2
.72
.18
. 36
.72
.79
.66
.53
519
559
602
636
700
764
836
9.1.1
941
958
EXP
.56
.78
.17
.28
.97
,51
,89
* 36
,85
,45
CONS
CHRG
19
19
19
19
20
20
19
19
20
21
,74
,43
.55
,98
.12
,01
,94
,97
.62
.40
TSP & Water
1976
1977
1978
1979
1980
19S1
1982
1933
1984
1985
97
84
132
133
118
1 r?ry
126
149
226
320
CAP
EXP
.24
.44
.70
...1.7
.47
.20
.06
.04
.37
/)/}
* *- *~
38
28
71
304
T>'2
57
98
129
140
229
EXT
FIN
.43
.48
. 34
.03
,55
.74
.86
.98
.49
,38
OPER
841
880
930
975
1053
1 122
1201
1283
1329
1361
REV
.95
.36
,38
.54
.35
.29
.46
.24
,87
.20
519
559
602
639
704
768
840
915
946
962
0+M
EXP
, 56
.78
. 1 7
,65
> 5b
ซ 30
.93
.65
.24
,90
CONS
CHRG
19
19
19
20
20
20
20
20
20
21
.75
.45
.59
. 14
,37
.25
.15
. 1 6
.8:1.
.60
Note: All figures -in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG)3 which are in mills per
kilowatt-hour.
-------
-59-
OHIO POWER COMPANY
Revised S00 Regulation
-1-- - ~ - ""' ~-"
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
104,31
104,38
159,33
146,56
118,47
122,20
126,06
149,04
226,37
320,22
EXT
FIN
45,49
48,90
98,33
309,40
51.28
92,54
123,81
134,63
223,85
OPER
REV
342,37
881,67
932,96
986,92
1069,02
.1.137,00
1214,73
1296,33
1342,41
1372,69
0+M
EXP
519,56
559,73
602,17
642,06
707,03
770,35
843,56
918,36
948,99
965,67
CONS
CHRG
19,76
19,43
19,64
20,38
20,68
20,37
20,37
21 , 01
21,79
Original S0? Regulation
1976
1977
1978
1979
1930
1981
1982
1983
1934
1985
137
200
286
208
1 1 3
122
1.26
149
226
320
CAP
EXP
,23
,14
,23
,96
,47
,20
, 06
,04
,37
,22
73
143
jd, *- *-
349
-1
34
76
109
120
2 1 0
EXT
FIN
,39
,31
,76
,89
,21
,95
,99
,03
,7.1.
,83
OPER
344
337
943
REV
,29
, 5 6
t '2. 3
1023, w5
1
1
1
1
1
1
128
194
2'.'70
349
395
422
, 4 7
,62
,60
.56
,92
,84
0
fri
EXP
519,
559,
602.
649 ,
715>
779,
352,
927,
953,
975,
56
73
1.7
88
1 7
32
39
57
35
1 3
C
C
19
19
19
21
21
21
21
21
21
22
ONS
HRO
,80
,61
.86
,12
,83
,55
. 3 .!.
,20
,84
,58
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CRRG), which are in mills per
kilowatt-hour.
-------
-60-
OHIO VALLEY ELECTRIC CORPORATION
Baseline
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
26.75
62.70
40.93
8.58
.70
.69
.68
.66
.65
.64
EXT
FIN
24.74
57.76
32.83
3.58
.00
.00
.00
-5.88
-5.62
-5.38
OPER
REV
181.21
184.98
188.47
194.36
205.56
209.41
213.26
212.76
217.33
222.15
0 + M
EXP
156.44
161.00
166.68
173.61
181.37
186.56
191.92
197.45
203.14
209.02
CONS
CHRG
9.93
10.14
10.33
10.66
11.27
11 .48
11.69
11.66
11.91
12.18
TSP & Water
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
29.53
70.90
52.04
15.20
.70
.69
.68
.66
.65
.64
EXT
FIN
27.40
65.36
42.59
9.35
.00
.00
.00
-7.42
-7.10
-6.79
OPER
REV
181
185,
188
196
212,
216,
217,
221
34
35
96
31
209.03
79
53
35
62
156.
161 ,
166,
174,
0*M
EXP
44
00
68
71
226.17
182.47
187.67
193.03
198.56
204.26
210.14
CONS
CHRG
9
10
10
10
11
,94
,16
,36
,76
,46
11.67
11.87
11.92
12.15
12.40
Note: All figures -in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG)^ which are in mills per
kilowatt-hour.
-------
-61-
OHIO VALLEY ELECTRIC CORPORATION
Revised S00 Regulation
1976
1977
1973
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
29.53
70.90
52.04
15.20
.70
.69
.68
.66
.65
.64
EXT
FIN
27.40
65.36
42.59
9.35
.00
.00
.00
-7.42
-7.10
-6.79
OPER
REV
181 .34
185.35
188.96
196.31
209.03
212,79
216.53
217.35
221.62
226.17
0 + M
EXP
156-44
161 .00
166.68
174.71
132-47
187.67
193.03
198.56
204.26
210.14
CONS
CHRG
9.94
10.16
10.36
10.76
11.46
11.67
11.87
11.92
12.15
12.40
Original S00 Regulation
1976
1977
I97d
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
30.45
73.61
55.72
17.39
.70
.69
.68
.66
.65
.64
EXT
FIN
28.28
67.88
45.83
1 1 .26
.00
.00
.00
-7.93
-7.59
-7.26
OPER
REV
181 .38
185.47
189.12
197.71
210.94
214.66
218.37
219.62
223.80
228.26
0 + M
EXP
156.44
161 .00
166.68
175.82
183.59
188.79
194.15
199.68
205.39
21 1 .27
CONS
CHPG
9.94
10.17
10.37
10.84
11 .56
11 .77
11.97
12.04
12.27
12.51
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
-------
-62-
TOLEDO EDISON COMPANY
Baseline
I97b
1977
1978
1979
1980
1981
1982
1983
1984
1985
CAP
EXP
152.77
152.18
129.32
146.35
171 .89
170.94
150.42
160.07
190. Ob
201 .23
FXT
FIN
127.94
133.43
88.05
Q9.54
125.03
111
110
87
118
07
51
12
77
144.76
REV
223.52
243.94
272.57
283.90
312.79
345.55
374.24
395.32
442.29
469.83
133
137
125.
133,
0 + M
EXP
63
52
58
05
146.02
154
161
164
169
93
89
69
46
174.03
CONS
ChRG
30.97
31 .94
33.97
34.31
35.15
35.65
35.46
35.52
37.89
38.14
TSP & Water
I97b
1977
1978
197-*
1980
1981
1982
1983
1984
1985
CAP
EXP
153.43
154.09
131 .84
147.59
171 .89
170.94
150.42
160.07
190.06
201 .23
128
135
90
99,
EXT
FIN
59
31
50
90
124.27
1 10.36
109.84
86.49
118.18
144.20
OPER
REV
223
244
272,
284,
346,
375,
396,
443
56
07
81
93
314.37
98
53
48
45
470.86
133
137
125.
133.
146,
155,
162.
164,
169,
1 74,
0 + M
EXP
68
52
58
19
16
08
04
84
61
18
CONS
CHRG
30.97
31.96
34.00
34.44
35.32
35.80
35.58
35.62
37.99
38.22
Note: All figures in millions of 1975 constant dollars except
Consumer Charges (CONS CHRG)} which are in mills per
kilowatt-hour.
-------
-63-
TOLEDO EDISON COMPANY (cON'l)
Revised S0n Regulation
I97o
1977
1978
197^
I960
19R1
1982
I98j
]9RH
I9flb
A
CAP
FXP
160.56
174. A7
159.08
161 .02
171 .^Q
170 .94
150.42
160.07
190. Ob
20 1 .33
EXT
F IN
135.65
155.58
116.97
107.08
1 19. 19
105.57
105.33
82.25
114.19
140 .44
OPER
223.95
245.45
275.39
296.61
332.22
363.96
391.63
41 1 .68
^59.21
0 + M
EXP
133.68
137.52
125.58
137.65
150.74
159.73
166.71
16Q.49
174.26
178.84
CONS
ChRQ
31
32
34
35
37
37
36
39,
.03
,14
,32
,84
37.33
55
10
99
34
39.42
Original S00 Regulation
1976
1977
I 97b
1979
198U
1981
1982
1983
1984
198s
CAP
EXP
161 .68
177.92
163.38
163.13
171 .89
170.94
150.42
160.07
190.06
201.23
EXT
FIN
136.77
158.77
121 . 14
106.70
116.97
103.49
103.37
80.41
112.47
138.83
OPER
REV
224.02
245.67
275.79
298.86
335.25
366.62
393.87
413.49
460.84
486.91
0 + M
EXP
133.68
137.52
125.58
137.42
150.66
159.73
166.72
169.47
174.20
178.77
CONS
CHRG
31 .04
32.16
34.37
36.11
37.67
37.82
37.32
37.15
39.48
39.52
Note: All figures -Cn millions of 1975 constant dollars except
Consumer Charges (CONS CHRG), which are in mills per
kilowatt-hour.
T
B
S
-------
-64-
APPENDIX B
COSTS OF POLLUTION CONTROL STRATEGIES
The following chart shows the type of pollution
control strategies and their associated costs provided to
TBS for use in this analysis.
The capital costs and 0/M (operating and maintenance,
including fuel) costs shown are in 1975 dollars and do not
include the cost of replacing, operating, or installing pol-
lution control equipment on the derated capacity. The cost
of replacing and operating the derated capacity was included
when performing the analysis.
These costs came from a variety of sources. The
costs of meeting particulate regulations and effluent guide-
lines were provided by EPA and PEDCO. The costs involved
with complying with the proposed and revised SCU regulations
were provided by Energy and Environmental Analysis (EEA) and
PEDCO. The derate figures were provided by EEA and modified
by TBS to reflect installation of pollution control equipment
on the replacement capacity.
-------
Appendix B
CAPITAL AND OPERATING COSTS OF POLLUTION CONTROL STRATEGIES
(costs 1n millions of 1975 dollars)
Company
Dayton Power and Light Company
Columbus & Southern Ohio Electric
Company
Cincinnati Gas and Electric
Company
Ohio Valley Electric Company
Toledo Edison Company
Cleveland Electric Illuminating
Ohio Edison Company
Ohio Power Company
Municipals & Cooperatives
Participate (TSP)
Capital1 0/M2 Derate3
Cost Cost (mw)
$17.51 $1.02 5.04
21.91 1.28 6.31
33.73 1.95 9.69
10.62 1.08 5.35
1.73 0.10 0.49
15.55 0.90 4.47
40.12 2.33 11.54
24.21 1.41 6.96
_
Effluent Guidelines
Capital1 0/M2 Derate3
Cost Cost (nw)
$15.97 $0 7.02
9.91 0 11.46
7.08 0 7.50
.
3.19 0 0
16.61 0 0
15.18 0 18.9
17.10 0 21.3
-
Proposed S0? Regulations
Capital1 0/M2 Derate3
Cost Cost (mw)
$ 46.25 $ 4.57 7.74
25.24 6.50 3.71
173.53 11.98 29.96
6.71 1.11 0
50.58 1.33 35.26
208.38 9.35 127.21
266.73 16.23 57.91
235.99 17.74 50.56
.
Revised SO. Regulations
Capital1 0/M2 Derate3
Cost Cost (nv<)
$ 15.79 $1.06 2.81
28.63 2.88 5.21
54.96 1.95 9.67
_
49.43 3.15 15.22
152.43 4.71 62.65
52.78 4.37 9.96
50.72 1.77 8.89
15.96 3.20 6.40
0
01
Capital ooata do not inalude cost of replacing the capacity lost through derate or the cost of pollution control equipment for the replacement
capacity. In this analysis, this lost capacity uas replaced at a cost of $423 per kilouatt, in 1979 dollars, plus the cost of pollution control equipment.
2
Operating and maintenance coats do not include the cost of operating the neu capacity which replaces the derate and the pollution control equipment
installed on the neu capacity. These costs were determined and included in the course of this analysis.
The amount of derate capacity uas increased by TBS to reflect the installation of pollution control equipment on the derate replacement capacity.
Source: EPA, EEA, PEDCO
------- |