AEP To Pay $4.6 Billion In Record Clean Air Settlement

October 9, 2007

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In a record settlement, American Electric Power has agreed to cut 813,000 tons of air pollutants annually at an estimated cost of more than $4.6 billion, pay a $15 million penalty, and spend $60 million on projects to mitigate the effects of its past excess emissions.

This is the largest settlement (consent decree) in terms of the value of injunctive relief, and will result in the largest amount of emission reduction from stationary sources, such as power plants and factories.

Eight states and 13 citizen groups joined the U.S. government in today’s settlement. The agreement imposes caps on emissions of pollutants from facilities located in Moundsville (2 facilities), St. Albans, Glasgow, and New Haven (2 facilities), W. Va; Louisa, Ky; Glen Lyn and Carbo, Va.; Brilliant, Conesville, Cheshire, Lockburne, and Beverly, Ohio; and Rockport and Lawrenceburg, Ind.

AEP will install pollution control equipment to reduce and cap sulfur dioxide and nitrogen oxide emissions by more than 813,000 tons per year when fully implemented. By installing these pollution control measures, the plants will emit 79 percent less sulfur dioxide and 69 percent less nitrogen oxides, as compared to 2006 emissions.

The record settlement comes eight years after the Justice Department, headed by then-Attorney General Janet Reno, filed suit alleging AEP and six other power companies had “illegally released massive amounts of air pollutants for years,” CNN reports.

“Since November 1999, when the initial complaint was filed by the government, we have remained firm in our belief that we operated our plants in compliance with the New Source Review provisions,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “That remains our position today.”

“But we have also said that we would be willing to consider ways to reasonably resolve these issues,” Morris continued. “This consent decree represents such a resolution. It recognizes the billions we have spent on environmental retrofits at our plants as part of ongoing business and the significant emissions reductions achieved at our plants. It also takes into account our existing plans for additional environmental retrofits on other plants. The mitigation projects included in the agreement are the types of activities that we have often undertaken on our own. And most importantly, this agreement enables us to make much-needed efficiency improvements at our plants without fear of additional NSR allegations.”

The company will spend an additional $60 million to finance and conduct projects to mitigate the impact of past emissions. Of the total, $24 million for these projects will be allocated among the states that joined the settlement. The remaining $36 million will be spent on mitigation projects identified in the settlement agreement.

The following eight states joined as plaintiffs in the case: New York, New Jersey, Massachusetts, Vermont, Connecticut, New Hampshire, Maryland, and Rhode Island.

AEP provides electric power to five million customers in 11 states, according to its Web site. The company is ranked 192 on the “Fortune 500″ list of corporations, on annual revenues of $12.6 billion, according to CNN.

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