PSEG agrees to spend $337 million to reduce air emissions

HOUSTON, Jan. 24 — Public Service Enterprise Group Inc. Thursday agreed to spend $337 million on air pollution control equipment at its New Jersey coal-fired power plants over the next 10 years to settle lawsuits with federal and state authorities.

As part of the deal, PSEG agreed to a $1.4 million civil penalty and to spend at least $6 million on three additional projects that will partially offset the impact of past emissions. The company agreed to reduce carbon dioxide emissions by 15%.

The decision brings the company into compliance with the New Source Review (NSR) provisions of the Clean Air Act (CAA), which require utilities and other industrial plants to install air pollution equipment when a plant undergoes major modifications.

The settlement resolves a complaint brought by the US Environmental Protection Agency, the Justice Department, and the New Jersey Department of Environmental Protection. The complaint alleged PSEG unlawfully operated the Mercer and Hudson plants by failing to install necessary pollution controls.

The controversial NSR rule, under challenge by US utilities and refiners, is being reviewed by the Bush administration. However, last week, the Justice Department said it would continue to prosecute seven lawsuits filed by the Clinton administration against utilities that allegedly violated clear air laws by expanding capacity at coal-fired units without installing pollution control equipment. The lawsuits were filed in 1999.

“This important settlement reflects our continuing commitment to enforce vigorously the Clean Air Act to protect public health and the environment,” said US Atty. Gen. John Ashcroft.

The nonprofit Clean Air Trust praised the PSEG agreement as a demonstration that enforcement of the CAA can lead to significant pollution reductions. “This agreement sets the bar for future new source review cleanup settlements,” said executive director Frank O’Donnell. “It shows why we need to keep and enforce a strong new source review program to promote strict pollution controls at individual plants.”

EPA said the combined effect of the pollution controls will reduce sulfur dioxide (SO2) emissions 90% and nitrogen oxide (NOxemissions by more than 80%. These decreases represent 32% of all SO2 and 20% of all the NOx emitted from stationary sources in New Jersey, EPA said.

PSEG Pres. Frank Cassidy said interpretation and application of NSR regulations have been a difficult problem for the entire electric power industry. “Maintenance activities performed over time at Hudson and Mercer were conducted in good faith. We believe our activities were in accord with the law as it was understood.”

He said the company agreed to the settlement to avoid costly litigation and to give shareholders and employees clear direction about the company’s future. At the 991 Mw Hudson and 648 Mw Mercer stations PSEG Fossil agreed to install scrubbers to remove SO2 from power plant emissions, and selective catalytic reduction systems (SCR) to control NOx. The company will also upgrade control devices for particulate matter and install an additional particulate control device to eliminate over 1,000 tons/year of that pollutant.

The project will be phased beginning with optimization of PM controls in 2002, installation of SCRs beginning in 2004, and installation of scrubbers beginning in 2006. All work will be completed by 2012.

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