“This, from our perspective, is huge – in a good way,” said Sarah Bodner, director of communications and community relations for I&M.
The main thing that makes it a better deal for I&M is that it allows the utility to use alternative technologies instead of a more costly scrubber on two power plants at its Rockport facility, she said. The cost of the scrubber for one unit had been estimated at $1.4 billion; she said that retrofitting two units at Rockport with the new technologies is estimated to cost about a fifth of the scrubber price for one unit.
Bodner said the utility has not finished calculating the rate hike it will seek to pay for the cost of these reductions in emissions.
The equipment at Rockport will not reduce sulfur dioxide as much as the scrubber would have. A limit placed on 16 of its power plants in Ohio, Indiana, West Virginia, Virginia and Kentucky was also made more stringent as part of the renegotiated deal, but AEP said it would have to make cuts in sulfur dioxide pollution anyway to comply with another EPA rule. Sulfur dioxide forms lung-damaging soot and smog, and has been linked to an array of respiratory problems.
Cheap natural gas and environmental regulations are causing utilities to shut down coal-fired power plants.
Bodner said she doesn't know yet whether I&M will shut down the Tanners Creek plant or convert it to natural gas. Three of the four units at Tanners Creek already had been scheduled for shut-down in 2015, she said.
AEP had previously announced it would stop using coal at the Muskingum River plant and switch it to natural gas. The company had already planned to retire another coal-fired power plant in Kentucky that is covered by the settlement, even though it was not required to stop using coal.
"We haven't committed to specifically retire any unit," said Melissa McHenry, an AEP spokeswoman.
The company also said Monday that while the cuts required are more than the initial agreement, it was planning to do them to meet a new EPA regulation aimed at reducing mercury and other air toxics from the nation's power plants.
Environmentalists said the deal will ensure the company doesn't change its mind.
"This is the first official commitment they are making to stop burning coal at these units," said Nachy Kanfer, a deputy director for the Sierra Club's Beyond Coal Campaign.
The states involved in the lawsuit included New York, Connecticut, Massachusetts, Maryland, New Hampshire, New Jersey, Rhode Island and Vermont.