NRG Energy (NYSE: NRG) subsidiary Louisiana Generating has agreed to install environmental controls at the Big Cajun II plant, convert one unit to natural gas and pay $14m in clean air fines, NRG and the U.S. Environmental Protection Agency said Nov. 20.
The settlement with EPA should eliminate more than 27,300 tons of harmful emissions per year. The settlement, lodged in federal court in Baton Rouge, La., will require Louisiana Generating to spend roughly $250m to cut emissions and also requires the company to pay a civil fine of $3.5m and spend $10.5m on environmental mitigation efforts, EPA said.
The deal involving the coal plant in New Roads, La., was initially announced by EPA and the U.S. Justice Department. NRG subsequently issued its own statement.
NRG owns 85.8% of the Big Cajun plant, which represents 1,495 MW. The entire capacity regardless of ownership is roughly 1,740 MW, a company spokesperson said. The NRG subsidiary announced a planned conversion of Unit 2 in a Form 10-Q filing with the Securities & Exchange Commission a few weeks earlier, citing environmental standards.
But the Nov. 20 announcement is the first time the new gas unit has been associated with settlement of the EPA case, the NRG spokesperson said. “The conversion will also allow more flexibility to meet demand and less cycling of units 1 and 3, which we anticipate will reduce outage costs,” said the NRG spokesperson.
Big Cajun deal will yield MATS compliance
To meet EPA’s Mercury and Air Toxics Standards (MATS), Louisiana Generating will convert one of the three units at the plant from coal to natural gas, eliminating virtually all mercury and particulate matter from the unit’s emissions, the company said.
Louisiana Generating will also install activated carbon injection on another unit and upgrade the electrostatic precipitators. The MATS rule goes into effect in April 2015.
Louisiana Generating will achieve these reductions through a combination of new pollution controls, natural gas conversion, and annual emission caps at all three units at the Big Cajun II plant. Emissions of SO2 will be reduced by about 20,000 tons and NOx by about 3,300 tons.
Louisiana Generating will spend an estimated $250m in capital costs to comply with the consent decree through the end of 2015. Louisiana Generating also has agreed to further air pollution reductions by 2025, which will reduce SO2 by at least an additional 4,000 tons each year.
The state of Louisiana joined in the settlement and will receive $1.75m, one-half of the $3.5m fine.
“The Big Cajun II Power Plant is the largest source of illegal air pollution in Louisiana. This settlement will secure substantial reductions in harmful emissions from the plant which will have a beneficial impact on air quality for residents of Louisiana and downwind states, including low-income communities who have been historically overburdened with pollution,” said Ignacia Moreno, assistant attorney general for the Justice Department’s Environment and Natural Resources Division. “Louisiana Generating will install modern air pollution controls that will significantly reduce harmful emissions and also will perform environmental projects that will conserve energy.”
Deal addresses old issues along with solar panels
For its part, NRG said it has been proactive on emissions since it purchased Big Cajun II from Cajun Electric in 2000. Louisiana Generating upgraded the burners and fuel, reducing NOx and SO2 by a third.
The changes and upgrades will further that progress. Work will be done during regularly scheduled outages and completed by April 2015, NRG said.
Louisiana Generating has also settled decade-old charges by EPA and the Louisiana Department of Environmental Quality for work done by the previous owner.
With the new agreement, NRG will install selective non-catalytic reduction (SNCR) controls to reduce NOx on all three units. It will also install dry sorbent inject equipment on Unit 1 to reduce SO2.
The capital cost of making the plant modifications and achieving the emission improvements are within the total environmental capital costs previously disclosed publicly by NRG.
“This agreement provides greater strength for Big Cajun II through additional controls that will allow the plant to comply with environmental regulations both now and in the future,” said Louisiana Generating President Jennifer Vosburg.
“In addition, the mitigation projects covered by the agreement will provide an opportunity to give back to our community as it showcases NRG Energy’s alternative energy solutions such as solar and electrical vehicles in Louisiana. This is a win-win-win situation,” Vosburg said.
As part of the settlement, NRG is investing in installing solar panels at local schools, non-profits or government buildings. The company also agreed to fund one or more electric charging stations for electric vehicles in South Louisiana. NRG also agreed to help protect land, watersheds, vegetation, and forests in the region and mitigate nitrogen loading in the False River.
The settlement marks the federal government’s 24th settlement under its national enforcement initiative to reduce emissions from coal-fired power plants under the Clean Air Act’s New Source Review requirements.
The proposed settlement will be lodged in the U.S. District Court for the Middle District of Louisiana and is subject to a public comment period and final court approval.