WASHINGTON (Reuters) - It will cost giant utility American Electric Power (AEP.N: Quote, Profile, Research) more than $4.6 billion to comply with a settlement with the U.S. government to reduce harmful air pollution from 16 coal-burning power plants, the Environmental Protection Agency said Tuesday.

In what the EPA called the single biggest environmental enforcement settlement in U.S. history, Ohio-based AEP agreed to end an 8-year lawsuit brought by the federal government.

AEP also agreed to pay $15 million in civil penalties and $60 million in pollution cleanup costs to end the "new source review" case brought by the feds in 1999.

AEP, whose fleet of coal-fired power plants form the backbone of the Midwest's power grid, agreed to cut soot and smog emissions by 813,000 tons a year when the agreement takes full force in about a decade. 

AEP spokesman Pat Hemlepp disputed the $4.6 billion figure and pointed out that the number did not appear anywhere in the consent decree filed in a U.S. district court in Ohio on Tuesday. The 121-page settlement came the day that a trial was scheduled to begin.

EPA's Nakayama called the $4.6 billion figure "a solid and conservative number," and said it would probably end up higher because it does not include operating costs.

"It's fair to say that those things were not in the plans in 1999 when this case was first brought," Nakayama said.

"We are doing these projects to comply with existing or upcoming environmental regulations, not because of some sort of requirement in the settlement agreement," Hemlepp countered.

AEP has spent $2.6 billion since 2004 to install pollution-control equipment at coal-fired plants in Kentucky, Ohio, Virginia and West Virginia, and will spend more than $5.1 billion fleetwide by 2010 on emission controls, Hemlepp said.

Full article at reuters.com

Source: Chris Baltimore, Reuters

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