CHICAGO -- Gov. George Voinovich of Ohio has signed into law a bill encouraging public utilities to install "scrubbers" on their coal-burning plants and issue tax-exempt bonds through the Ohio Air Quality Development Authority to finance some of the air pollution control equipment.
The Tax Reform Act of 1986 does not allow tax-exempt bonding for equipment to control air pollution, but it does for solid-waste facilities. The new legislation recognizes part of the equipment in question as a solid-waste facility and therefore explicitly allowable under state law, according to Mark Shanahan, the authority's executive director.
The part is the component that deals with the sludge resulting from treatment of the coal emissions. Darrell Fields, an associate at Forbes, Forbes & Associates, the authority's legal counsel, said an estimated 10% to 30% of the scrubbers' cost could be eligible for tax-exempt financing.
One utility, American Electric Power, has estimated that it would cost $795 million to install a scrubber at one of its Ohio plants.
Jerry Wissman, the assistant director of the utilities department of the Ohio Public Utilities Commission, said deciding on installation would be up to the individual public utilities, although any financing plans for the equipment would need commission approval.
He added that the legislation was a response to federal clean air regulations, as well as a way to keep the utilities using Ohio coal despite its high sulphur content. Utilities can still decide to switch to low-sulphur coal from out-of-state mines if they find that to be cheaper than scrubbers, he said.
Even though the state is encouraging the utilities to use tax-exempt debt through the authority to finance part of the scrubbers, Mr. Shanahan said the authority still would be competing for a share of the state's private-activity cap, which he said was about $545 million this year.