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KU to pay $1.4 million federal fine

Kentucky Utilities will pay a $1.4 million fine, spend $3 million on environmental projects and install $135 million worth of pollution controls at a Mercer County power plant to settle violations of the federal Clean Air Act.

The equipment installed at the E.W. Brown Generating Station near Shakertown will reduce emissions of two key pollutants, sulfur dioxide and nitrogen oxides, by more that 90 percent from 2007 levels, the Environmental Protection Agency and the Justice Department said Tuesday.

The plant has been blamed for some of the air pollution that drifts into Lexington.

The three coal-fired units at the plant can produce 700 megawatts of electricity, more than one-fifth of KU's total capacity.

The government sued KU in 2007, saying the company had modified the largest of the three units in 1997 so that it burned more coal and produced more pollution. The modifications were made without installing the required pollution control equipment, the EPA said in its lawsuit.

That lawsuit was settled Tuesday by a consent decree under which KU agreed to pay the fine and install the equipment, but didn't admit it did anything wrong.

"We clearly felt we were in compliance with the laws and regulations of 1997," said Chip Keeling, a spokesman for KU. "It's better to settle these kinds of disputes by working cooperatively with the regulatory agencies rather than going into litigation."

Why did it take the EPA so long to act? In an e-mail, EPA spokesman Dave Ryan said that, because KU did not seek the proper permits for its modifications at the plant, the agency had to rely on an information request to discover the violation. EPA then turned the case over to the Justice Department, which negotiated the settlement. The settlement gives KU time to install the controls without disrupting service, Ryan said.

John C. Cruden, an acting assistant attorney general in the Justice Department, hailed the settlement as a victory for the Clean Air Act.

"This settlement will result in the substantial reduction of harmful emissions, and will benefit air quality in Kentucky and downwind areas," he said in a statement.

Catherine McCabe, an acting assistant director of the EPA, said the new limits for nitrogen oxides from the Brown plant will be the most stringent ever imposed in a settlement with a coal-fired plant.

KU began installing the required pollution equipment at the plant a little more than a year ago, Keeling said. The installation is expected to be completed by late 2012. The controls will make the Brown plant one of the cleanest in Kentucky, he said.

The EPA said sulfur dioxide and nitrogen oxides will be reduced by more than 31,000 tons a year when the controls are in place. Fine particulate matter will decrease by 1,000 tons a year.

KU also agrees to surrender nitrogen oxides and sulfur dioxide credits it would have qualified for after installing the state-of-the-art controls. Because it will not be able to sell those credits, the pollution they represent will be removed from the environment permanently, the EPA said.

Nitrogen oxides are blamed for a number of health problems and contribute to ground-level ozone, acid rain and global warming, the EPA says.

Sulfur dioxide is a main contributor to acid rain and aggravates heart and lung disease.

Particulate matter also causes lung and heart problems.

Besides the fine and the money spent on pollution control, KU also agreed to contribute $3 million to programs that include retrofitting school buses to reduce emissions.

A 2005 report from an advocacy group called Clear the Air said that sulfur dioxide emissions from the Brown plant had increased from 28,800 tons in 1995 to 56,700 tons in 2003. That was the ninth-highest increase in the nation, the group said.

At the time, Keeling said the plant put out more pollution because it was producing more electricity. It went from burning 1 million tons of coal a year to 1.7 million tons, he said.

Much of the increased electrical output from the plant was sold to other utilities outside the area, Keeling said, and that has kept local rates low.

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