As a result of one of the most extensive environmentalinvestigations ever, federal authorities last week filed a stringof lawsuits and other actions against 32 coal-fired utility plantsin the South and Midwest for allegedly failing to installpollution-control equipment when major facility upgrades were made.These actions, they said, contributed significantly to the higherlevels of nitrogen oxide (NOx), sulfur dioxide (SOx) andparticulate matter emissions over the years.

The lawsuits, which were filed by the Department of Justice onbehalf of the Environmental Protection Agency (EPA), asked thefederal courts to force the coal-fired generation plants to installthe “best available” pollution-control technology in compliancewith the Clean Air Act (CAA). The federal agencies also are seeking”significant” civil fines from the violators, ranging from up to$25,000/day for each plant prior to Jan. 30, 1997 to $27,500/dayafter that date. Seven lawsuits were filed in U.S. District Courtsin five cities – Atlanta, GA; Indianapolis, IN; Tampa, FL; East St.Louis, IL; and Columbus, OH.

They targeted 17 vintage power plants owned by seven majorutilities – American Electric Power, Cinergy, FirstEnergy, IllinoisPower, Southern Indiana Gas & Electric Co., Southern Co. andTampa Electric Co. The EPA didn’t overlook the utilities owned bythe federal government in its sweeping investigation. It brought anadministrative complaint against the Tennessee Valley Authority(TVA) for pollution-control violations at seven of its powerplants. The agency also issued notices of violations to eight othercoal-fueled facilities operated by Cinergy, American Electric andSouthern.

When the dust finally settled last Wednesday, 32 utility plantsin Alabama, Florida, Georgia, Illinois, Indiana, Kentucky,Mississippi, Ohio, Tennessee and West Virginia were either staringat lawsuits, EPA complaints or were cited for violations. Theseactions were the product of a two-year investigation by the EPA,which it says is still ongoing. The agency intends to investigate anumber of other coal-fired power plants to determine whether they,too, are violating federal emission standards.

Specifically, the coal-fired plants, which were grandfatheredunder the CAA, were cited for the violations after they allegedlymade major modifications to extend the lives of their plantoperations or to increase output. Under the act, Congress hadlimited these plants to only making minor modifications to theirfacilities in return form exempting them from the pollution-controlrequirements. Congress permitted the exemption on the belief thatthese facilities, which were built decades before the act waspassed in the 1970s, would be closed by now.

The grandfathered “companies were allowed to perform routinemaintenance [under the CAA], but they were not allowed to makesignificant changes to the plant – such as increased generatingcapacity, increased burning of coal, or modifications thatprolonged the life of the plant,” said EPA Administrator Carol M.Browner during a press conference held at the Justice Departmentlast Wednesday.

“We charge that the companies named in these actions spenthundreds of millions of dollars modifying these plants – increasingtheir life and increasing their pollution. And they did thiswithout applying for permits, without public notice and withoutinstalling pollution-control technology,” she told reporters. Forexample, she noted, one plant spent $60 million on five newfurnaces, while another spent $10 million on ten new burners.

Illinois Power officials disputed EPA’s claim that its powerfacility in Baldwin, IL, was guilty of violations. “We operate ourelectric generating plants in compliance with all federal and stateenvironmental laws,” said Senior Vice President Alec G. Dreyer. “Inaddition, we are investing hundreds of millions of dollars inpollution-control equipment that will reduce Baldwin’s sulfurdioxide emissions by 90% and nitrogen oxide emissions by nearlytwo-thirds.” Other utility companies on EPA’s hit list, such asCinergy and American Electric Power, also questioned the merits ofthe charges.

The EPA’s action “represents a new interpretation of [its] ownregulations,” Dreyer noted. “At no time during numerous inspectionsof facilities or review of quarterly emission reports have eitherstate or federal environmental officials indicated problems orviolations relating to the charges they’re making now.”

The plants targeted by the EPA probe “collectively emit millions[of] tons of sulfur dioxide every year,” which contribute to acidrain, and millions of tons of nitrogen oxide, which cause “the smogthat stings our eyes and lungs every summer,” said Attorney GeneralJanet Reno. The facilities account for roughly 70% of annual SOxemissions and 30% of NOx emissions in the United States, accordingto the federal government.

The natural gas industry wasn’t ready to declare thegovernment’s action against the coal-fueled plants to be good newsfor gas. “I hate to say any litigation is good for gas. I thinkit’s unfortunate that it’s gotten to this point where they’re incourt, and they haven’t been able to work out these issues throughprivate settlements,” said John Sharp, vice president ofgovernmental affairs for the Natural Gas Supply Association.

“Is it good for gas? I suppose some people might say it is. Butlitigation like this usually takes a long period of time, and it’snot clear that the EPA or Justice will prevail in the end. I thinkit’s premature to say whether it will be good for gas,” he toldNGI.

Even absent the lawsuits, Resource Data International Inc.(RDI), a Colorado-based energy consulting firm, doesn’t paint aparticularly rosy picture for King Coal. In a study released lastmonth, it said the combination of electric deregulation, stifferenvironmental regulations and greater competition from gas-firedgenerators was expected to restrain coal’s growth in the near term.RDI predicts coal-fueled generation will grow by only 8% over thenext five years, while gas-fired generation will increase by 38%during the same period.

On the environmental front, RDI said the costs associated withnew SOx and NOx emission limits in 2003 were likely to increase thecosts and reduce the profitability of coal-fired plants,particularly in the eastern region. “The increase in costs [is]projected to narrow the national average fuel cost advantage ofcoal-fired plants 66% from $5.61/MWh to $2.82/MWh by 2003,”according to the study, “Coal-Fired Generation in CompetitiveGeneration Markets.”

The RDI study identified 25% or 75,000 MW of coal-fired capacitythat will have higher fuel costs than new gas-fired combined cycleplants in 2003. “Generation from these at-risk, underutilizedcoal-fired plants is forecast to remain flat through 2003, as newgas-fired units are expected to capture the lion share ofelectrical demand growth……”

Susan Parker

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