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New York Reaches Emissions Settlements With NRG, AES, Utilities

New York Reaches Emissions Settlements With NRG, AES, Utilities

New York Gov. George Pataki and Attorney General Eliot Spitzer last week unveiled agreements with NRG Energy, AES Corp. and New York State Electric and Gas Corp. (NYSEG) that will cut emissions from six upstate coal-fired power plants, including the state's two largest-polluting power plants. Niagara Mohawk (NiMo), previous owner of several of the plants, is also be affected by the settlements.

Combined, the settlements represent the largest reduction in air pollution levels ever attained through settlement in New York, according to Spitzer, who recently said he will run for governor in the state next year. Together the agreements will reduce nitrogen oxide (NOx) emissions by more than 18,000 tons annually, while sulfur dioxide (SO2) emissions will decrease by more than 123,000 tons per year.

Under a settlement of the state's lawsuit with NRG Energy, the company will reduce SO2 emissions by 87% and NOx emissions by 81% at its Huntley and Dunkirk power plants in western New York.

"This milestone agreement signifies NRG's commitment to the state of New York and the environment -- it delivers many benefits to the state and its residents, including a faster reduction in emissions than might have otherwise occurred with federal or state legislation," said David Crane, NRG's CEO.

To meet the requirements of the settlement, NRG will retire units 63 and 64 at its Huntley facility after receiving the appropriate regulatory approvals. Units 65 and 66 will be retired 18 months later. NRG also has agreed to limits on the transfer of certain federal SO2 allowances. The agreed upon emissions reductions will occur progressively over the next eight years, the company noted.

"NRG's Huntley and Dunkirk plants play a critical role in providing competitively priced and reliable electric power to the region and we are proud that we can achieve this in an environmentally responsible manner," said Caroline Angoorly, NRG vice president for environmental and new business.

The agreement resolves a lawsuit brought by the state of New York for alleged noncompliance with the Clean Air Act. The lawsuit arose out of a notice of violation (NOV) issued by the New York Department of Environmental Conservation (DEC) for alleged non-compliance with New Source Review (NSR) regulations that occurred before NRG's acquisition of the facilities.

NRG purchased the Huntley and Dunkirk Generating Stations from NiMo in June 1999. Dunkirk Station, a four-unit, 600 MW plant, is located 55 miles southwest of Buffalo, NY. Huntley Station, located three miles north of Buffalo is comprised of six units with a total generating capacity of 760 MW.

NiMo will have to pay a $3 million penalty and provide an additional $3 million to support several environmental benefit projects in western New York, including weatherizing low-income housing and adding pollution controls to school buses. NiMo also has agreed to convey 2,500 acres of environmentally sensitive land along the Salmon River to the state. The Oswego County parcel is valued at more than $2.5 million.

Meanwhile, the state has also reached an agreement with AES and NYSEG to reduce emissions at four former NYSEG coal-burning power plants in the Finger Lakes and Southern Tier. Under the terms of the agreement, AES will reduce emissions of NOx at the four plants by at least 70% and SO2 by at least 90%.

As part of its agreement with the state, AES, as the current owner of the plants, will install innovative clean coal technology at its Greenidge Power Plant in the town of Torrey as a demonstration project approved and partially funded by the Department of Energy.

AES will also either shut down or install new pollution controls at its Hickling facility in Corning, the Westover plant in Johnson City and the Jennison facility in Bainbridge. AES already is utilizing state-of-the-art pollution control equipment at other major facilities in the towns of Barker and Lansing.

In addition, a $700,000 penalty has been assessed against NYSEG and AES will provide $1 million toward energy efficiency, renewable energy or clean air projects.

In the original lawsuit against NRG and NiMo in 2002, the state charged that NiMo had made major modifications at its Huntley and Dunkirk plants while failing to install the necessary state of the art pollution controls as the law requires, and that NRG, which bought the plants in 1999, also violated the law by continuing to operate the plants without proper pollution controls.

In May 2000, the state identified similar violations by NYSEG at the Westover and Greenidge plants. However, AES agreed to the settlement without being sued by the state.

Under the Clean Air Act, older power plants like those now operated by NRG and AES were exempted from having to comply with the stricter air pollution standards under the NSR rules unless they underwent major modifications that increased their pollution. This "grandfathering" was based on the assumption that these plants would be retired and replaced by new cleaner power plants.

However, some companies, as alleged in these cases, modified their power plants to extend their life span while claiming that the modifications were routine maintenance and therefore exempt from the stricter pollution control requirements.

Spitzer launched a clean air initiative in September 1999. The attorney general, citing Clean Air Act violations, sued eight utilities that operate 17 Midwest power plants. One of those companies, VEPCO, settled in 2003, agreeing to significant reductions in emissions. Cases against companies in Ohio, West Virginia and Indiana are pending.

The New York Attorney General's Office, working with the state DEC, previously settled clean air cases with Orange and Rockland Utilities and Mirant, the past and current operators of another in-state plant, in June 2003.

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