Mirant last Wednesday unveiled an agreement between the company’s New York business unit, the New York attorney general and the New York Department of Environmental Conservation resolving allegations of non-compliance with federal and state Clean Air Act new source review (NSR) regulations at Mirant’s 348 MW Lovett power plant.

The allegations were made in a notice of violation issued to Orange & Rockland Utilities, the prior owner of the plant, for a period pre-dating Mirant’s ownership, which began in 1999. The agreement is the first of its kind between a New York power generator and New York.

Mirant admitted no violation and believes the plant has been operated in accordance with the law. The company was not assessed any penalty or fine under the agreement.

Under the settlement, Mirant will install state-of-the-art selective catalytic reduction technology on the Lovett plant’s two coal-fired units to reduce nitrogen oxide emissions to 78% below the plant’s permitted emission rate.

Mirant also agreed to install in-duct injection technology on each coal-fired unit and a baghouse, a technology to remove particulate matter, which are expected to reduce mercury emissions and reduce sulfur dioxide emissions to a level that is at least 40% below the plant’s permitted emission rate.

Implementation of these environmental controls will be completed by 2007- 2008, according to Mirant. Current estimates of the expenditures for emission controls are consistent with assumptions presented in Mirant’s financial and capital spending plans. The controls and emission reductions will position the Lovett plant to operate under more stringent future federal and state environmental requirements, the company said.

The coal-fired units at Lovett currently utilize low sulfur coal as a primary fuel source and generate 348 MW of electricity, or the amount of electricity required to power approximately 350,000 homes.

“This agreement provides Mirant with greater certainty in managing current and future environmental requirements in New York,” said Mark Lynch, president of Mirant’s northeast business unit. “It also affirms our long-standing commitment to the environment. With the agreement in place, Mirant can invest in the environmental technology needed to help improve the air quality in New York.”

“The settlement we have reached with Mirant will improve air quality in the Hudson Valley and beyond,” said New York Attorney General Eliot Spitzer. “As this agreement demonstrates, power companies can act responsibly and with foresight. I commend Mirant for their commitment to reducing air pollution at their Lovett power plant.”

Mirant purchased the power plant in June 1999 from Orange and Rockland Utilities during New York’s divestiture of electricity generation assets.

This week’s announcement marks the latest in a string of recent NSR-related settlements reached between power companies and state and federal governments.

Earlier this month, Southern Indiana Gas and Electric Co. (SIGECO), the U.S. Department of Justice (DOJ) and the U.S. Environmental Protection Agency (EPA) announced a proposed agreement that would resolve a lawsuit filed by the EPA and DOJ in 1999 alleging NSR violations at SIGECO’s Culley Generating Station in Yankeetown, IN.

Similar agreements have been announced in recent months by Dominion and WE Energies.

The Clean Air Act’s NSR rule requires utilities to undergo review for environmental controls if a power company builds new plants or if “non-routine” changes are made to existing power plants, that result in a significant increase in emissions.

Some utilities have allegedly violated the law by undertaking major improvements and upgrades to their power plants without also installing the required pollution controls. The Bush administration has implemented changes to NSR intended to give utilities advance notice of whether modernizing their power plants will bring stricter emission reductions, which could save them clean-up or modification expenses.

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