EPA's record settlement with utility could lead to other deals

AEP agreed Tuesday to spend $4.6 billion to install pollution controls on 16 power plants.

from the October 11, 2007 edition

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Indeed, the companies say they are already equipping their power plants with pollution-control equipment.

"We are already installing scrubbers on the vast majority of our units," says Tom Williams, spokesman for Duke Energy, based in Charlotte, N.C. While it's company policy not to comment on any discussions in ongoing litigation, he adds, "We still think we have a solid defense against the government claims" in the Duke Energy and Cinergy cases.

Tuesday's AEP deal stems from a 1999 lawsuit that the EPA filed against the company, based in Columbus, Ohio. It charged AEP with rebuilding coal-fired plants without installing pollution controls – a violation, they said, of a provision of the Clean Air Act known as New Source Review.

Companies had been reluctant to settle with the government because, under President Bush, the EPA in concert with the White House had signaled a preference for the industry-favored interpretation of the pollution rule, Mr. Walke says. Power companies have long claimed that the New Source Review does not require additional pollution controls after new plant equipment is installed, even if annual pollution goes up, as long as hourly pollution levels don't rise.

But in June, the US Supreme Court ruled 9 to 0 in favor of a stricter interpretation of that key provision.

In a statement, AEP officials said the company had done nothing wrong and had already spent $2.6 billion since 2004 to reduce the pollutants. But for business reasons, the officials added, it was best to get the dispute resolved.

Besides cutting SO2 and NOx emissions from 16 coal-fired plants in five states, the company also agreed to pay a $15 million civil penalty as well as $60 million to help fix environmental damage to Maryland's Chesapeake Bay and the Shenandoah National Park in Virginia.

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