Duke settles with EPA

Clark County

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December 22, 2009

Duke settles with EPA

Modifications at New Albany power plant an issue in suit about air quality

By DAVID A. MANN The News and Tribune Tue Dec 22, 2009, 10:07 PM EST

Duke Energy has settled a decade-old air-quality lawsuit with the U.S. Environmental Protection Agency, the U.S. Department of Justice and others concerning New Albany’s Gallagher Station power plant.

Under the $93 million settlement, filed in federal court in Indianapolis Tuesday, the company can choose to either shut down two of the electricity producing coal-burning units at the plant or convert them to natural gas burners. The change would eliminate particulate matter and mercury emissions and decrease carbon dioxide emissions, the EPA said in a statement.

A press release from Duke Energy said the company expects that it will convert the units, but no decision is required until January 2012. The company also will install additional pollution controls on the station’s other two units and switch to using lower sulfur fuel at the plant.

It estimates the cost to convert the units to gas and install additional pollution controls will be about $80 million, a press release from the company says. The settlement includes civil penalties of $1.75 million to resolve violations of federal clean air laws.

It also earmarks about $6 million for other environmental projects. Of that, Duke will use $5 million to upgrade and expand the power output of the company’s 81-megawatt Markland Dam hydroelectric power plant near Vevay, the release says.

The government agreed not to pursue further litigation for past Gallagher maintenance projects.

The settlement stems from a lawsuit in which the EPA alleged that Cinergy — which merged with Duke Energy in 2006 — undertook six power-plant upgrades in Indiana and Ohio without obtaining new permits.

The coal burning units in question were installed between 1958 and 1961, according to Duke spokeswoman Angeline Protogere. The government alleged that the company’s installation of those did not qualify as routine maintenance and that Cinergy should have predicted that the projects would increase emissions at the plants, the EPA’s release says.

The EPA statement said the settlement is expected to reduce sulfur dioxide emissions at the Gallagher Plant by 86 percent compared to 2008 levels. The 35,000-ton sulfur dioxide reduction is equivalent to the emissions from 500,000 heavy duty semi trucks — which is more than all such trucks registered in Indiana, Illinois, Kentucky and Ohio combined, the EPA said.

“Coal-fired power plants are big contributors to air pollution, which is why we need to make sure they comply with the law,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, in a press release. “As a result of this enforcement action, Duke will make large cuts in air pollution, which means cleaner air and better health for the millions of people living in communities downwind of this plant.”

Jim Turner, president and chief operating officer of Duke Energy’s Franchised Electric and Gas business, called the settlement acceptable.

“This is a reasonable settlement that resolves some long-standing issues, advances our two-decades long effort to improve air quality in the region, and positions us to comply with increasingly stringent environmental regulations,” he said.

The company can continue to operate the units during the natural gas conversion.

“We will be able to continue using all the units at our Gallagher power plant to serve our customers. The settlement also helps to increase the size and power output of our Indiana hydroelectric plant — a very clean source of energy for Indiana,” Turner said.

The lawsuit was filed in 1999 and Duke went to trial in May 2009. An Indianapolis jury found that Duke violated the Clean Air Act by failing to obtain required permits and pollution controls before making modifications that caused significant increases in sulfur dioxide.

The jury found in favor of the company regarding another project at Gallagher station and other projects near Princeton. The settlement comes as a trial was supposed to start in January.

“After more than 10 years of litigation, we are pleased to be resolving our differences with the government with respect to the Gallagher plant,” said Marc Manly, Duke Energy’s chief legal officer.

Duke Energy Indiana’s operations provide approximately 6,800 megawatts of electricity capacity to about 780,000 customers, making it the state’s largest electric supplier. It’s the third largest electric power holding company in the United States, based on kilowatt-hour sales.