Allegheny Power 2010 Annual Report Download - page 131

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(C) ENVIRONMENTAL MATTERS
Various federal, state and local authorities regulate FirstEnergy with regard to air and water quality and other
environmental matters. Compliance with environmental regulations could have a material adverse effect on FirstEnergy’s
earnings and competitive position to the extent that FirstEnergy competes with companies that are not subject to such
regulations and, therefore, do not bear the risk of costs associated with compliance, or failure to comply, with such
regulations.
Clean Air Act Compliance
FirstEnergy is required to meet federally-approved SO2 and NOx emissions regulations under the CAA. FirstEnergy
complies with SO2 and NOx reduction requirements under the CAA and SIP(s) under the CAA by burning lower-sulfur
fuel, combustion controls and post-combustion controls, generating more electricity from lower-emitting plants and/or
using emission allowances. Violations can result in the shutdown of the generating unit involved and/or civil or criminal
penalties.
The Sammis, Eastlake and Mansfield coal-fired plants are operated under a consent decree with the EPA and DOJ that
requires reductions of NOx and SO2 emissions through the installation of pollution control devices or repowering. OE and
Penn are subject to stipulated penalties for failure to install and operate such pollution controls or complete repowering in
accordance with that agreement.
In July 2008, three complaints were filed against FGCO in the U.S. District Court for the Western District of Pennsylvania
seeking damages based on Bruce Mansfield Plant air emissions. Two of these complaints also seek to enjoin the Bruce
Mansfield Plant from operating except in a “safe, responsible, prudent and proper manner”, one being a complaint filed
on behalf of twenty-one individuals and the other being a class action complaint seeking certification as a class action
with the eight named plaintiffs as the class representatives. FGCO believes the claims are without merit and intends to
defend itself against the allegations made in those three complaints.
The states of New Jersey and Connecticut filed CAA citizen suits in 2007 alleging NSR violations at the Portland
Generation Station against GenOn Energy, Inc. (the current owner and operator), Sithe Energy (the purchaser of the
Portland Station from Met-Ed in 1999) and Met-Ed. Specifically, these suits allege that “modifications” at Portland Units 1
and 2 occurred between 1980 and 2005 without preconstruction NSR permitting in violation of the CAA’s PSD program,
and seek injunctive relief, penalties, attorney fees and mitigation of the harm caused by excess emissions. In September
2009, the Court granted Met-Ed’s motion to dismiss New Jersey’s and Connecticut’s claims for injunctive relief against
Met-Ed, but denied Met-Ed’s motion to dismiss the claims for civil penalties. The parties dispute the scope of Met-Ed’s
indemnity obligation to and from Sithe Energy.
In January 2009, the EPA issued a NOV to GenOn alleging NSR violations at the Portland Generation Station based on
“modifications” dating back to 1986 and also alleged NSR violations at the Keystone and Shawville Stations based on
“modifications” dating back to 1984. Met-Ed, JCP&L, as the former owner of 16.67% of the Keystone Station, and
Penelec, as former owner and operator of the Shawville Station, are unable to predict the outcome of this matter.
In June 2008, the EPA issued a Notice and Finding of Violation to Mission Energy Westside, Inc. alleging that
“modifications” at the Homer City Power Station occurred since 1988 to the present without preconstruction NSR
permitting in violation of the CAA’s PSD program. In May 2010, the EPA issued a second NOV to Mission Energy
Westside, Inc., Penelec, NYSEG and others that have had an ownership interest in the Homer City Power Station
containing in all material respects identical allegations as the June 2008 NOV. On July 20, 2010, the states of New York
and Pennsylvania provided Mission Energy Westside, Inc., Penelec, NYSEG and others that have had an ownership
interest in the Homer City Power Station a notification that was required 60 days prior to filing a citizen suit under the
CAA. In January, 2011, the DOJ filed a complaint against Penelec in the U.S. District Court for the Western District of
Pennsylvania seeking damages based on alleged “modifications” at the Homer City Power Station between 1991 to 1994
without preconstruction NSR permitting in violation of the CAA’s PSD and Title V permitting programs. The complaint
was also filed against the former co-owner, NYSEG, and various current owners of the Homer City Station, including
EME Homer City Generation L.P. and affiliated companies, including Edison International. In addition, the
Commonwealth of Pennsylvania and the State of New York intervened and have filed a separate complaint regarding the
Homer City Station. Mission Energy Westside, Inc. is seeking indemnification from Penelec, the co-owner and operator of
the Homer City Power Station prior to its sale in 1999. The scope of Penelec’s indemnity obligation to and from Mission
Energy Westside, Inc. is under dispute and Penelec is unable to predict the outcome of this matter.
In January 2011, a complaint was filed against Penelec in the U.S. District Court for the Western District of Pennsylvania
seeking damages based on the Homer City Station’s air emissions. The complaint was also filed against the former co-
owner, NYSEG and various current owners of the Homer City Station, including EME Homer City Generation L.P. and
affiliated companies, including Edison International. The complaint also seeks certification as a class action and to enjoin
the Homer City Station from operating except in a “safe, responsible, prudent and proper manner.” Penelec believes the
claims are without merit and intends to defend itself against the allegations made in the complaint.