M.

HASSAN JAVED = 424-BH-ENV-18

Putting Environmental Economics in Perspective: Case study of Four

Corners Power Plant (John R. Bartlit, DCHE)

Summary

In this case study, pollution cut costs of installation 75% effective wet scrubbers at the
Four Corners Power Plant, New Mexico was investigated. The considered cost of
connection and process of the scrubbers was found to $82 Million, be around over thirty
years, the total load on customers being $ 2.12 Billion. To shorten the stats, fitting of
wet scrubbers increased the cost of electricity from 7.12 mills per Kwh to 13 mills per
Kwh.

OWNER NAME REVENUE

APS 482,000,000 $
SCE 2,592000,000$
PNM 110000,000$
EPE 113000,000$
TGE 240000,000$
SRP 250000,000 $
TOTAL 3,787000,000$ ($3.78 billion)
TABLE 1-Revenues from Electric Operations-1977
Calculation
30-year average revenues = $5,370,926 million/ 30
= $179,031 million per year
30-year average pollution control costs - $82 million
30-year average revenues $179,031 million
= 0.046% increase in revenues
Actually, it is $3787million per annum if we see table 1. if we take in consideration the
income of Four corner plants. Adding of $ 82million is actually 2.2 % of total revenue.
Although this value is correct and includes expected inflation. Actually, this value
doesn’t signify the whole case. To explain the full case, increment in revenue of
company also needs to be kept in mind. Graph no.2 shows, that the total revenue had
been increasing on an average Rate of 20%. If this project increased Is included and
sum of 30 years revenue is calculated, it is $5,370,926million, it means $179,031
 M. HASSAN JAVED = 424-BH-ENV-18

million per year. If we related, a layman can assume that cost of $82million per year
means only increase of 0.046 % in the average cost out of revenues. This whole case
detail shows that 5 cents in 100$ bill is enough to pay. If the project revenue increase
is change from 20 to 11 percent, even then, increase of only 0.29%.

Increase in Revenue at Four Corners 1969-77

12
39 11

17

11
18

18
34

1969 1970 1971 1972 1973 1974 1975 1976 1977

GRAPH.2

The case study has successfully shown that although the installation costs of wet
scrubbers was correct , yet it was misused by limiting the knowledge of public . It can
be seen through calculations that if the revenue rise of the plant is taken in account, the
obvious increase in expenses changes from 2.2 % of total revenue to merely 0.46% of
total averaged revenue of 30 years. This means, that if the company burdens the
customers only, still only a 5% increase over a 100 dollar bill will be issued.

Economic Factors 20% per year 11% per year 7% per year
30-yr. Avg. Annual
$179,031 million $27,886 million $12,758 million
Revenues
% increase in electric
bills due to $82 million
0.046 0.29 0.64
per year spent for Four
Corners controls
Consumer's electric bill
of $100 $100.05 $100.29 $100.64
would be increased to

Table 3; Assumed Escalation Rates on Economics for Four Corners Participants

and Customers
 M. HASSAN JAVED = 424-BH-ENV-18

The motive of this study is satisfied and it has successfully disclosed that how same
values can be represented in confusing contexts to support the view of businesspersons
and influence the officials , regulators and public to consider economy over
environment.