Following an eight-year legal battle, American Electric Power Co (AEP) has agreed to spend $4.6 billion to reduce the emissions from its power plants, just before a six-week trial was due to start in Columbus Ohio. The lawsuit was originally brought against AEP in 1999 by the Environment Protection Agency (EPA) along with a dozen environmental groups and eight states - Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.
The lawsuit accused AEP of rebuilding a number of coal-fired power stations without installing the pollution controls required by the Clean Air Act. Environmentalists have blamed the power plants for causing acid rain and smog through the release of sulfates and nitrates into the atmosphere. The acid rain has been a problem for the Northeast for the last 25 years, causing damage to both natural features like the Adirondacks mountain range and man-made features like the statue of liberty. AEP has agreed to bring 46 coal-fired systems in 16 plants within the requirements of the Clean Air Act, even though it insists some of the work it carried out was routine maintenance rather than rebuilding work, so was outside the scope of the act.
Michael Morris, AEP's chairman, president and CEO, said in a statement: “This settlement is an excellent outcome for our shareholders… It eliminates the potentially significant financial risk of pursuing the litigation to its conclusion while still achieving the environmental improvements that both we and the government want.” Perhaps the outcome will be less excellent for AEP's 5 million customers, who no doubt will have to pay for the settlement through higher charges. While on paper this looks like a tough settlement for AEP, in practice it is much more lenient than it appears. AEP spokesperson Pat Hemlepp said the company was planning to spend just $1.6 billion in improvements under the settlement, in only two of its plants. The figure of $4.6 billion includes money that AEP has already committed to spend in its cleanup operations, with an estimated spend of $5 billion up to 2010 to provide improvements. Hemlepp said AEP’s settlement “include things we've already done or committed to do or already budgeted, even before the settlement”.
So what exactly has this settlement committed AEP to? Well, the following:
- Spend $4.6 billion (most of which is money already allocated to improvements) on pollution control measures to reduce nitrogen oxide emissions by 69% by 2016 and sulfur dioxide emissions by 79% by 2018.
- Pay $15 million in civil fines, although AEP disputes the fact it violated the Clean Air Act, and has not admitted guilt on this issue.
- Pay a total of $60 million in mitigation costs, such as $24 million for energy conservation and alternative energy projects, $2 million for Shenandoah National Park, $3 million for Chesapeake Bay and other assorted projects.– The Guardian
