By Keith Benman keith.benman@nwi.com, (219) 933-3326 nwi.com | Posted: Friday, January 14, 2011 12:00 am
The U.S. EPA and NIPSCO have reached a settlement involving alleged violations of the Clean Air Act that mandates the installation of $600 million in pollution control equipment at power plants and $9.5 million more for environmental projects across the region.
The Environmental Protection Agency alleged the utility modified power plants without obtaining proper permits and installing appropriate pollution control equipment in the late 1980s and 1990s. It is the 17th such settlement the EPA has reached with U.S. utilities.
"The pollution reductions in this settlement will ensure that the people of Indiana and neighboring states have cleaner, healthier air to breathe," said Cynthia Giles, assistant administrator of EPA's enforcement office.
The settlement also requires NIPSCO to pay a $3.5 million civil penalty, although the utility maintains that it acted in accordance with regulations because it had only undertaken routine maintenance, repair and replacements in the instances cited by EPA.
NIPSCO officials enthusiastically endorsed the settlement Thursday.
"This is a major win for our customers, the environment and the communities we serve," NIPSCO CEO Jimmy Staton said.
Staton pointed out the installation of $600 million in pollution controls at power plants will create hundreds of jobs over the next seven years. The $9.5 million in environmental projects will create new clean energy options for NIPSCO customers across the region, he said.
The settlement also was welcomed by Northwest Indiana environmentalists, with Alliance for the Great Lakes founder Lee Botts describing the settlement as a game changer for the region.
"It will make this region more attractive as a place to come and live and do business," Botts said.
The settlement will affect NIPSCO customer bills, which already contain a small surcharge to pay for pollution control equipment at power plants. But that charge will remain small as the $600 million will be recouped gradually over more than a decade through the state's rate-making process, according to NIPSCO.
NIPSCO had faced steep fines if the EPA and Department of Justice had successfully prosecuted the case in court. Fines for violations of the EPA's regulations can be as high as $35,000 per day per violation.
NIPSCO power plant emissions of nitrogen oxide, associated with lung disease, will be reduced by 35 percent under the settlement. Emission of sulfur dioxide, which can aggravate existing respiratory and cardiovascular diseases, will be reduced by 80 percent.
The utility previously has installed $350 million in pollution control equipment at its power plants, which saw dramatic reductions in nitrogen oxide emissions during the last two decades. Sulfur dioxide emissions fell sharply in the early 1990s and then began to fall again in recent years as new pollution controls were instituted.
NIPSCO has three active coal-fired power plants, which produce electricity for its 457,000 electric customers. Those plants are R.M. Schahfer, in Wheatfield; Bailly, in Chesterton; and Michigan City, in Michigan City. Gary's Dean H. Mitchell has been out of operation for a number of years, and NIPSCO plans to permanently close it under the settlement.
The section of the law under which the EPA has prosecuted NIPSCO, other utilities and many large industrial plants is known as New Source Review and Prevention of Serious Deterioration. Its enforcement has been controversial. Utilities and industry argue that EPA often wrongly categorizes routine maintenance and replacement of existing equipment as constituting new sources of pollution.
The EPA argues that utilities and industry were aware of the requirements from the start and that enforcement of the regulations will result in the removal of about 2 million tons of pollutants yearly from the air Americans breathe.
Public can comment on EPA/NIPSCO settlement
The proposed settlement for NIPSCO's alleged violations of the Clean Air Act is on file at in the U.S. District Court for the Northern District of Indiana, in Hammond. There is a 30-day public comment period.
More information on commenting is available at http://www.justice.gov/enrd/Consent_Decrees.html .
$9.5 million windfall for northern Indiana environment
The settlement between U.S. EPA and NIPSCO over the utility's alleged violations of the Clean Air Act includes $9.5 million to be spent on environmental projects across NIPSCO territory. Here are some of the projects:
• NIPSCO will spend up to $2 million to fund one or more publicly available charging stations for electric vehicles in Northwest Indiana.
• NIPSCO will spend up to $2 million to acquire, donate and restore environmentally sensitive lands adjacent to the Indiana Dunes National Lakeshore.
• NIPSCO will start a program to retrofit diesel engines with equipment to reduce pollution. This may include public vehicles such as buses.
• NIPSCO will undertake a program to retrofit or swap out highly-polluting wood stoves and boilers. Retrofitting will reduce pollution and the swap out part of the program will include ultra-low emission technology such as geothermal heat pumps.
Here is additional information from the NIPSCO website at
http://www.nipsco.com/About-us/Environment/epa-settlement.aspx
Northern Indiana to Benefit from NIPSCO’s EPA Settlement
Benefits include Cleaner Air, Local Jobs and Environmental Investment
NIPSCO has been working with the Environmental Protection Agency and others to settle a Notice of Violation (NOV) under the Clean Air Act’s New Source Review permitting process.
- NIPSCO is one of more than 50 U.S. electric companies receiving an NOV since 1998.
On Jan. 13, 2011, NIPSCO reached a settlement with the EPA, which requires the company to invest in additional environmental controls and clean air technology at its environmentally compliant coal-fired generating facilities over the next eight years.
- Many investments are already planned or completed through NIPSCO’s proactive environmental improvement strategy.
- Investments include installing technology to further reduce Nitrogen Oxide (NOx), Sulfur Dioxide (SO2) and particulate emissions.
Improving Northern Indiana’s Energy Infrastructure, Economic Prospects
Investment in additional environmental control technology to further improve air quality - about $600 million in the next eight years - will contribute hundereds of new jobs for locally contracted companies during the next eight years, as well as new positions within the company.
- Improved air quality will improve the quality of life and promote additional economic development in northern Indiana.
NIPSCO is a leader in improving air quality, and since 1990, has individually reduced the NOx and SO2 emissions by 70 percent with investments of more than $350 million. After these additional investments, NIPSCO will have among the cleanest coal fleets in the state.
In part, due to environmental investments by NIPSCO, northwest Indiana was designated as an attainment area in 2010 for the first time since the 1990 Clean Air Act was adopted. Attainment area status is a key factor in economic and community development.
Ongoing Air Quality, Environmental Improvements
When all of the requirements of the settlement are completed in 2018, NIPSCO’s NOx emissions will be 35 percent below current rates, SO2 emissions will be 80 percent below current rates, and other benefits, such as reduced fleet vehicle emissions and improved air quality monitoring, will be achieved.
NIPSCO will also invest $9.5 million in various environmental improvement projects in the next five years, which could include various direct benefits to customers and the environment through such initiatives as;
- Publicly available electric vehicle charging stations – powered exclusively with renewable energy.
- Replacement of diesel engines in NIPSCO’s vehicle fleet with hybrid and/or electric vehicles.
- Acquisition and conservation of environmentally sensitive properties in the region.