AEP will close coal units in settlement with EPA

American Electric Power Co. said it will stop using coal to generate power at three plants, as part of a settlement with government regulators and environmental groups, a sign of continuing pressure on coal-heavy utilities.

As part of the agreement, AEP, the largest U.S. coal user, said it will also further reduce sulfur-dioxide pollution from its other, existing coal plants nationwide, conforming this modified legal settlement to the requirements of pending regulations from the Environmental Protection Agency.

While the Columbus, Ohio-based company had previously announced aspects of the deal, the full scope of the control measures and closings is a sign of the pressure on power producers to cut or clean up coal use for electricity generation, environmental advocates said.

“Across the country, the coal industry faces unprecedented setbacks as its share of electricity generation plummets, and the cost of coal continues to skyrocket,” Jodi Perras, Indiana representative for the Sierra Club’s Beyond Coal Campaign, said in a statement. “This agreement is only the latest sign of progress.”

AEP said earlier this month that it expects to spend $4 billion to $5 billion on pollution controls at its coal-fueled plants through 2020, less than the $6 billion to $8 billion it had estimated in 2011. It also said its coal plants should generate about half of its power by decade’s end, down from 65 percent.

1999 Lawsuit

The company initially set the agreement with eight states, EPA and environmental groups in 2007 on a lawsuit filed in 1999. As part of a modification of the deal today, AEP is switching the control-technology at its Rockport plant in southern Indiana to the cheaper, less effective dry-sorbent injection from flue- gas desulfurization.

In return for that change, AEP will develop more wind and solar power in Indiana and Michigan. And it will close or shift to natural-gas three units at existing coal plants: Tanners Creek Generating Station unit four in Indiana, the Muskingum River Power Plant unit five in Ohio and the Big Sandy Power Plant unit two in Kentucky.

The company had previously planned to retrofit the Tanners Creek plant and continue burning coal there, Melissa McHenry, a company spokeswoman, said in an e-mail. It had already announced that it planned to shutter or remodel into natural-gas units the other two, she said.