July 23, 2010
Contacts:
Chris Tryba, Hoosier Energy (812) 876-0337
Rick Moore, Hoosier Energy (812) 876-0282
Hoosier Energy announces settlement agreement with EPA on New Source Review issues
Hoosier Energy has reached a settlement agreement with the U.S. Environmental Protection Agency (EPA) to resolve alleged New Source Review (NSR) violations of the Clean Air Act.
Under terms of a proposed consent decree filed today in the U.S. District Court, Southern District of Indiana, Hoosier Energy will maintain flexibility in operating its generating stations to produce reliable power for member electric cooperatives and their consumer-owners.
The settlement calls for Hoosier Energy to complete emission reduction projects at coal-fired power plants over the next eight to ten years that will further reduce sulfur dioxide, nitrogen oxide, sulfuric acid and particulate emissions. Hoosier Energy will also provide approximately $5 million for other programs to benefit the environment and pay a $950,000 civil penalty.
Hoosier Energy produces 20 percent more power today than 10 years ago while emissions have been reduced by more than 50 percent. The generation and transmission cooperative, which has earned state and national recognition for environmental outreach programs, maintains it has been and remains in compliance with the Clean Air Act and that routine power plant activities have not violated New Source Review provisions.
"Hoosier Energy remains committed to environmental compliance and stewardship, reliable service, and keeping costs and rates as low as possible" said Chief Executive Officer Steve Smith. "The settlement agreement is in the best interests of our members and their consumers in southern Indiana and Illinois. It removes litigation risk and uncertainty, enables us to focus on power supply operations and reliability, and minimizes cost and rate impacts to consumers."
Terms of the settlement allow Hoosier Energy to maintain operating flexibility at the Frank E. Ratts Generating Station in Pike County. The cooperative also agreed to enhance and add environmental equipment to further reduce emissions at the Merom Generating Station in Sullivan County. Projects addressed in the consent decree, and related costs, are consistent with the types of projects in Hoosier Energy's five year plan. The EPA-required projects in the settlement will add $50 million to $100 million to already budgeted costs for improvements to environmental equipment.
The EPA issued a Notice of Violation (NOV) on August 26, 2009, alleging that Hoosier Energy power plant maintenance projects have violated New Source Review provisions of the Clean Air Act. The settlement agreement was reached after 10 months of negotiations involving the EPA, Indiana Department of Environmental Management (IDEM) and Hoosier Energy.
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What is New Source Review? As part of the 1977 Clean Air Act Amendments, NSR is a preconstruction permitting program that requires existing sources of emissions to receive a permit when facilities are modified resulting in increased emissions. What constitutes a modification has been a source of dispute among EPA, utilities, industrial groups and environmental interest organizations.
What is a Notice of Violation for NSR? EPA can issue a Notice of Violation when it contends that a preconstruction permit should have been obtained for a power plant modification. The EPA has issued NOV's alleging NSR violations to many other utilities, cooperatives and power plant owners.
What is a Consent Decree? A consent decree is a contract to settle violations alleged by a government entity that the parties enter with judicial approval.
About Hoosier Energy
Hoosier Energy is a generation and transmission cooperative providing electric power to 17 member electric distribution cooperatives in central and southern Indiana and one member cooperative in Illinois. Based in Bloomington, Hoosier Energy operates coal, natural gas and renewable energy power plants and delivers power through a 1,700-mile transmission network.