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Ohio Edison to Spend $1.1 Billion Under Clean Air Settlement

The U.S. Department of Justice (DOJ) and the Environmental Protection Agency (EPA) on Friday announced the settlement of their landmark Clean Air Act case alleging that Ohio Edison Co., a subsidiary of FirstEnergy Corp., violated the New Source Review (NSR) provisions of the Clean Air Act at the W.H. Sammis Station, a coal-fired power plant in Stratton, OH. The pollution controls and other measures required by the consent decree are expected to cost approximately $1.1 billion.

The states of New York, New Jersey and Connecticut, who are co-plaintiffs in the government's lawsuit, also join the settlement. The consent decree agreed to by Ohio Edison will reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from the Sammis plant, as well as from other Ohio Edison and FirstEnergy coal-fired power plants, by over 212,000 tons per year.

FirstEnergy said that the estimated $1.1 billion investment in environmental improvements is consistent with assumptions reflected in the company's long-term financial planning. Nearly all of the expenditures are expected to be capital additions and depreciated over a period of years and the majority of these expenditures are expected to be made between 2008 and 2010.

The settlement resolves a lawsuit filed in 1999 as part of a federal government initiative, joined by New York, New Jersey and Connecticut, to bring operators of coal-fired power plants into compliance with the NSR provisions of the Clean Air Act. The Sammis Station is one of the largest sources of air pollution in the nation, emitting a total of tons of SO2 and NOx in 2003.

After a four-week trial in 2003 the U.S. District Court for the Southern District of Ohio agreed with the government that there were NSR violations at the Sammis plant. The court had not yet held the second trial needed to determine what pollution controls, penalty and other remedies would be required for these violations. The settlement resolves the remedy phase of this litigation, thereby averting a trial.

The consent decree will reduce SO2 and emissions from the Sammis Station by a total of 134,500 tons of SO2 and 28,567 tons of NOx per year. Pollution controls will be installed at all seven of the Sammis steam-generating units, and a plant-wide cap will be imposed on emissions. The two largest units, which account for over half the plant's pollutant emissions, will receive state-of-the-art pollution controls known as flue gas desulfurization devices (scrubbers), which reduce SO2 emissions by at least 95%, and selective catalytic reduction (SCR) devices, which reduce NOx emissions by at least 90%.

Pollution controls will be installed between 2005 and 2010. The final plant-wide caps and emission reduction levels will be achieved in 2012. Ohio Edison and FirstEnergy will provide over 49,000 tons per year of additional reductions in SO2 and NOx emissions from three other power plants: the Burger plant in Belmont County, OH; the Mansfield plant in Beaver County, PA.; and the Eastlake plant in Eastlake, OH.

These additional reductions will be achieved by upgrading existing pollution controls or installing new pollution controls at these plants. The additional reductions will bring the total SO2 and emission reductions under the Consent Decree to over 212,000 tons per year by 2012.

In total, FirstEnergy said that additional environmental controls could be installed on nearly 5,500 MW of the company's 7,400 MW of coal-based generating capacity, with construction beginning in 2005 and completed no later than 2012. Much of the company's remaining generation comes from nearly 3,800 MW of non-emitting nuclear plants, which generate approximately 40% of the company's annual output.

This is the ninth settlement that the federal government has entered into to address Clean Air Act NSR violations by coal-fired power plants. The combined effect of the settlements achieved to date will be to reduce emissions of harmful pollutants by over 940,000 tons each year through the installation and operation of about $5.5 billion worth of pollution controls, the DOJ and EPA said.

In terms of both the amount of the pollution reductions and cost, this settlement is the second largest of the power plant NSR settlements to date. The $8.5 million civil penalty imposed is the second largest penalty against a power plant. The $25 million amount for mitigation projects, to compensate for the harmful effects of Ohio Edison's past violations, is the largest mitigation project commitment in any of the United States' NSR settlements with utilities to date.

Ohio Edison will fund $14.4 million in renewable energy development projects, specifically wind power projects in Pennsylvania, New Jersey or western New York. The wind power generated will displace an equivalent amount of coal-fired power and thereby further reduce emissions from coal-fired plants.

Ohio Edison may propose, alternatively, to fund new projects to generate electricity from landfill gas in New York, New Jersey or Connecticut.

Ohio Edison also will provide a total of $10 million to the states of New York, New Jersey and Connecticut to perform environmentally beneficial projects related to air pollution in those states. The specific projects will be determined by the states after the consent decree is entered. Allegheny County will receive $400,000 to install a solar power project at one of the county's municipal buildings.

Ohio Edison also will provide $215,000 to the National Park Service for an environmentally beneficial project related to air pollution in Shenandoah National Park, a Clean Air Act "Class I area" that has been adversely impacted by emissions from Sammis and other power plants, the EPA and DOJ noted.

The proposed consent decree will be lodged with the United States District Court in Columbus, OH, for a thirty-day public comment period.

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