NIPSCO reaches $600MM settlement with EPA for violation claims at its coal-fired facilities

Source: Northern Indiana Public Service Company

Following discussions with the U.S. Environmental Protection Agency (EPA), Department of Justice (DOJ) and the Indiana Department of Environmental Management, NIPSCO has finalized a settlement outlining about $600 million in new environmental investments, conservation initiatives, and clean energy programs designed to improve the environmental and economic sustainability of northern Indiana.

Outlined in the settlement are environmental controls and clean air technology that further reduce nitrogen oxide, sulfur dioxide and particulate matter emissions at the company's coal-fired electric generation facilities.

The settlement is the 17th reached by the EPA and DOJ as part of a national initiative to control emissions from coal-fired power plants under the Clean Air Act's New Source Review requirements. It follows a 2004 Notice of Violation of the EPA's New Source Review process alleging that NIPSCO made upgrades or modifications to its generating facilities in the 1980s and 1990s without obtaining the proper permits.

NIPSCO is among more than 50 U.S. electric companies receiving a Notice of Violation since 1998 as part of the EPA initiative, and NIPSCO maintains that it acted in accordance with the regulations and conducted only routine maintenance and upgrades on the units. This settlement resolves all matters related to the New Source Review and future claims through 2018.

Importantly, the investments contemplated in the settlement support and complement the environmental improvements NIPSCO has already made to date.

Benefits of the Settlement

By the close of 2018, NIPSCO will invest approximately $600 million in improved environmental technology and related projects. Key benefits of these investments will include:

• Cleaner Air: NIPSCO's electric generating fleet is expected to be among the cleanest in Indiana, with NOx emissions lowered by an additional 35 percent from current rates, SO2 emissions lowered by an additional 80 percent from current rates, and other benefits, such as reduced fleet vehicle emissions and improved air quality monitoring, will be achieved. These improvements will have an added benefit of helping NIPSCO achieve compliance with anticipated tighter future emission standards.

• Jobs and Economic Development: Installation of new environmental controls at NIPSCO's R.M. Schahfer, Bailly and Michigan City generating stations are projected to create hundreds of new jobs for locally contracted companies during the next eight years, as well as new positions within the company.

• Conservation and Clean Energy: NIPSCO also will invest $9.5 million over the next five years in new environmental conservation and clean energy projects, including:

- Working with local communities and organizations to develop new publicly available electric vehicle charging stations – powered exclusively with renewable energy

-Replacing and retrofitting diesel engines with hybrid and/or electric vehicles throughout our service territory

- Partnering with the Indiana Dunes National Lakeshore and other regional conservation groups to acquire and conserve environmentally sensitive properties in the region

Under the terms of the settlement, NIPSCO will also pay a $3.5 million civil penalty. The additional environmental investments have been planned as part of anticipated ongoing capital spending.