Duke Energy's Indiana Coal-Fired Generation Plant Settles For 93 Million Dollar, EPA Air Penalty.

Gallagher plant photo

Duke Power, R Gallagher Plant in Indiana, viewed across Ohio River. Image credit:WebEcoist

Long story short: in the1990's Duke Energy's Gallagher Coal-Fired Plant ducked 'prevention of significant deterioration' regs, either by increasing the plant's generation capacity or by otherwise changing operations in a manner not consistent with then-existing air operating permit conditions for sulfur dioxide emissions. (Permit modifications should have been first applied for first. This sort of activity has been a common issue with US utilities.) Per EPA enforcement release: "As a result of a lawsuit filed 1999, Duke went to trial in May 2009 for related violations. At that time, an Indianapolis jury found that Duke violated the Clean Air Act by failing to obtain required permits and pollution controls before making modifications to Gallagher Units 1 and 3 that caused significant increases in sulfur dioxide. The trial to determine the appropriate remedy for the violations resolved by the settlement had been scheduled to begin on January 25, 2010."

Duke elected to settle; and, rather than add SOX scrubbing pollution controls, will switch to natural gas. This significantly cuts acid rain causing emissions, as well as carbon and mercury emissions overall. Without any Cap & Trade.Because natural gas has gotten so much cheaper recently, Duke also saves money on fuel.

What choice did Duke have?

Strategically speaking, they might have awaited the scheduled 2010 trial, appealing any adverse outcome, hoping for a degregulatory "pendulum effect" following the next US congressional election. But they didn't.

Duke's settling for natural gas instead of added pollution controls on coal units sets a precedent I expect many more utilities may follow, as USEPA further enforces PSD and also "BACT," taking advantage of cheaper natural gas and avoiding the capital investment and loss of generating capacity - possibly in the 10 to 20% range - that results from adding the requisite SOX and mercury controls. Plus better PR.

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