By Jim Polson

Feb. 10 (Bloomberg) — American Electric Power Co., the largest U.S. coal consumer, reduced by 13 percent the amount of coal-fired generation it will shut because of new environmental regulations, saying it may get state support to spend $940 million to keep a Kentucky unit operating.

The company still plans to close power plants with about 5,138 megawatts of capacity, Chief Executive Officer Nick Akins said at an investor conference in New York today. The Columbus, Ohio-based company said in June that new U.S. Environmental Protection Agency rules would force it to retire as much as 5,909 megawatts of capacity.

The difference stems from the companys decision in December to seek a 31 percent rate increase to fund environmental equipment needed to keep its Big Sandy Unit 2 in Kentucky operating, Akins said later in an interview. State regulators have indicated American Electric may be able to recover from customers the almost $1 billion needed to keep the unit operating, he said.

A U.S. air-pollution rule to reduce power-plant emissions that cross state lines was halted by a federal court last year. Separate regulations to cut mercury pollution are scheduled to go into effect in 2015. Akins has asked for more time to phase in the regulations and in Nov. 30 testimony to federal energy regulators said the company would have to spend $6.7 billion in the next three years to comply with the rules.

American Electric plans to shut power plants that generate about 2,600 megawatts and sell electricity at state-regulated rates, plus another 2,538 megawatts owned by a unit that sells power at wholesale-market rates, Akins said.

FirstEnergy Retirements

It said it hasnt identified which of the regulated plants will shut. Slides from a Dec. 7 presentation list 12 units with expected retirement in 2014 that are owned by its utility subsidiaries.

For the competitive unit, the company lists 5 plants it owns in Ohio, according to slides posted today. One of the plants closed last year. It also included in its tally 53 megawatts from a Duke Energy Corp.-owned unit in Ohio, which American Electric owns a 12.5 percent stake in Replica Watches, according to the other companys website.

FirstEnergy Corp., an Akron-Ohio based utility owner, has announced it will shut 3,349 megawatts of coal-fired power plants this year because of new environmental rules.

Arch Coal Inc., the fourth-largest U.S. coal producer by market value, said today it expects demand for the fuel will decline by 50 million tons or more this year as mild weather and low natural-gas prices curb use by power companies.

–With assistance from Julie Johnsson in Chicago and Mark Drajem in Washington. Editors: Jessica Resnick-Ault, Tina Davis

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
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By Aya Takada and Yasumasa Song

(Adds industry officials comments in sixth paragraph.)

Feb. 8 (Bloomberg) — Wheat prices in Japan, Asias second- largest importer, may decline in April by the most since October 2009, putting food makers including Yamazaki Baking Co. and Nisshin Seifun Group Inc. under pressure to cut prices.

The price of wheat imported by the government for sale to flour millers may drop about 10 percent from 57 Replica Watches,720 yen ($748) a metric ton on average, according to SMBC Nikko Securities Inc. That would help the milling industry save almost 29 billion yen in costs a year, Japans Flour Millers Association estimates.

The reduction, the first in two years, may increase deflationary pressure after consumer prices in Japan declined for a third straight year in 2011. Lower food costs could boost personal spending, which has shown signs of reviving amid a deepening export slump.

“A drop in the grain costs will increase price-cutting requests to food makers from retailers,” Yoshiyasu Okihira, senior analyst at SMBC Nikko Securities in Tokyo, said in an interview. “Bread makers will have no other options but to lower prices, probably around July.”

The government will decide whether to adjust wheat prices in late February based on purchasing costs in the previous six months, said Hiromi Iwahama, director for grain trade and operation at the Ministry of Agriculture, Forestry and Fisheries.

Iwahama declined to comment further on possible changes ahead of the announcement. Masaaki Kadota, executive director at the Tokyo-based flour millers association, said a 10 percent cut is likely.

Costs of importing wheat in the five months ended Jan. 31 declined about 15 percent from the previous pricing period, according to ministry data. The expected drop would be the largest since October 2009, when the government slashed prices by 23 percent to 49,820 yen a ton on average.

Yen Rally

The decline came after the Japanese currency rallied to a postwar record against the dollar. Wheat in Chicago retreated after reaching a 29-month high in February 2011, as high prices spurred more planting and boosted a global glut.

Wheat futures lost 17.8 percent last year on the Chicago Board of Trade, the biggest decline since 2008. The price reached a record $13.495 a bushel in February 2008. The March- delivery contract was at $6.6575 a bushel at 4:42 p.m. Tokyo time.

Japan imports almost 90 percent of its wheat and sourced about 60 percent of the grain last fiscal year from the U.S., the biggest exporter. Overseas purchases and domestic sales are controlled by the agriculture ministry, which reviews the selling price to flour millers every six months.

Increased Buying

Millers may accelerate wheat purchases in coming months, taking advantage of a cut in the government-set prices, as cold weather in Europe boosts speculation the price may increase in October, said Charlie Utsunomiya, director at the Tokyo office of U.S. Wheat Associates.

Last year, the government raised the wheat price by 2 percent in October after boosting it by 18 percent in April, the most in three years. Yamazaki Baking Co., the largest bread maker in Japan, raised its prices by about 6 percent on average in July, the first gain since 2008. Media relations executives at Yamazaki and Nisshin declined to comment or be identified when contacted by Bloomberg News, citing company policy.

Japan paid 27,103 yen a ton on average for 474,705 tons of milling wheat from the U.S., Canada and Australia in January, the ministry data show. The price, dropping from 27,255 yen in December, was 28 percent less than a year ago.

World food prices tracked by the United Nations Food and Agriculture Organization reached the highest ever in February 2011 on surging grain prices, before slipping 11 percent through December.

–Editor: Richard Dobson

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net Yasumasa Song in Tokyo at ysong9@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
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By Simon Kennedy

(See EXT4 for more on Europes debt crisis)

Feb. 14 (Bloomberg) — The European Central Bank risks repeating the mistakes of policy makers after the Soviet Unions break-up that led to the collapse of the ruble as a regional currency, according to Citigroup Inc. chief economist Willem Buiter.

By allowing national central banks to expand their balance sheets at varying rates, the Frankfurt-based ECBs policies echo condition following the collapse of the Soviet Union Replica Watches, Buiter wrote in a report today. Successor states initially shared a monetary union called the ruble zone only for it to collapse because of a lack of policy cohesion.

The ECB may be following a “road at whose end awaits the complete Rublezonefication of the common monetary, credit and liquidity policy into 17 different national policies and, ultimately, a fracturing of the monetary union into multiple independent national monetary regimes,” Buiter wrote.

In the aftermath of the Soviet Unions break-up in 1991, all 15 states used the ruble. While Russias central bank was the only one that could issue notes and coins, the others could create bank credit. This led to hyperinflation and eventually countries were pushed out or introduced their own currencies, Buiter said.

The ECB last week said seven national central banks in the euro-area could expand the assets they accept when providing liquidity to the financial system, paving the way for banks to borrow more when a second round of unlimited three-year loans are issued this month. It had previously said national central banks could grant emergency liquidity assistance in return for collateral that wouldnt usually qualify for ECB operations.

Pooling Profits

These policies conflict with how a currency union should be operating, the former Bank of England policy maker wrote. Central control should be applied to the size of balance sheets and any loses or profits should be pooled, said Buiter.

“One would have hoped that by now a uniform set of rules, standards and practices would have emerged for the operation implementation of the common monetary, credit and liquidity policy,” he wrote. “The opposite appears to be happening.”

–Editors: James Hertling, Paul Abelsky

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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