Duke Energy reaches $93 million settlement over violations at southern Indiana power plant

Duke settles air violations at southern Ind. plant

INDIANAPOLIS — Duke Energy Corp. will spend about $93 million to settle clean air violations at a coal-fired power plant in southern Indiana where unauthorized changes significantly boosted air pollution, the federal government said Tuesday.

The U.S. Environmental Protection Agency said the consent decree filed in federal court in Indianapolis will end its decade-old lawsuit against Duke, a suit three Eastern states affected by pollution wafting far beyond the Louisville, Ky., area later joined.

Under the proposed settlement, the EPA said Duke Energy will spend $85 million to cut sulfur dioxide emissions at its Gallagher plant near New Albany, Ind., by nearly 35,000 tons per year. Duke said the upgrades will cost about $80 million.

The EPA said the changes will cut sulfur dioxide emissions 86 percent from last year’s levels at the plant directly across the Ohio River from Louisville.

“As a result of this enforcement action, Duke will make large cuts in air pollution, which means cleaner air and better health for the millions of people living in communities downwind of this plant,” said Cynthia Giles, an EPA assistant administrator for enforcement.

Charlotte, N.C.-based Duke will also pay a $1.75 million civil penalty to resolve violations of federal clean air laws and spend $6.25 million on environmental mitigation projects. Those include a total of $1 million for New York, New Jersey and Connecticut.

Those states joined the EPA’s lawsuit in 2001, alleging that the 560-megawatt station worsened air pollution and acid rain damage to their lakes, forests and wildlife.

Environmentalists have called the plant, which dates to 1958, one of the nation’s “dirtiest” in terms of air pollution produced per unit of electricity.

Tim Maloney of the Hoosier Environmental Council, an environmental group that joined the EPA’s lawsuit, said the settlement will improve the health of people in Indiana and states downwind of the plant.

“Not only will the offending units be retired or converted to cleaner burning natural gas, the two other polluting units at the plant must also substantially reduce their emissions,” Maloney said.

The lawsuit was one of several environmental enforcement actions the EPA took in 1999 across the utility industry. It alleged that Cinergy, which merged with Duke in 2006, undertook six power plant upgrades in Indiana and Ohio without obtaining new permits.

In May, a federal jury ruled that Duke violated the Clean Air Act when it failed to obtain needed permits and install modern pollution-control equipment when it made changes to two units at the Gallagher plant.

A trial to determine what steps Duke would have to take at the plant had been scheduled for January. The settlement is final following a 30-day comment period.

Jurors had agreed with federal prosecutors’ contention that the changes to the two Gallagher units were not routine plant maintenance but instead “major modifications” that increased each unit’s annual sulfur dioxide emissions by at least 40 tons a year.

The settlement requires Duke to either convert those units to natural gas or install equipment to remove all sulfur dioxide pollution. The utility must also install new pollution controls for sulfur dioxide at the plant’s two other units.

“After more than 10 years of litigation, we are pleased to be resolving our differences with the government with respect to the Gallagher plant,” said Marc Manly, Duke Energy’s chief legal officer.

As part of its environmental mitigation projects, Duke said it will spend $5 million to upgrade and expand the power output of its 81-megawatt Markland Dam hydroelectric power plant near Vevay, Ind., pending state regulatory approval.

In May’s verdict, the federal jury ruled in Duke’s favor on the four other power plant upgrades in question — one unit at its Gibson plant near Princeton, Ind., two at its Beckjord Station in New Richmond, Ohio, and one of the Gallagher plant’s units.