Allegheny Power 2010 Annual Report Download - page 62

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On December 9, 2008, a transformer at JCP&L’s Oceanview substation failed, resulting in an outage on certain bulk
electric system (transmission voltage) lines out of the Oceanview and Atlantic substations resulting in customers losing
power for up to eleven hours. On March 31, 2009, the NERC initiated a Compliance Violation Investigation in order to
determine JCP&L’s contribution to the electrical event and to review any potential violation of NERC Reliability Standards
associated with the event. NERC has submitted first and second Requests for Information regarding this and another
related matter. JCP&L is complying with these requests. JCP&L is not able to predict what actions, if any, that the NERC
may take with respect to this matter.
On August 23, 2010, FirstEnergy self-reported to ReliabilityFirst a vegetation encroachment event on a Met-Ed 230 kV
line. This event did not result in a fault, outage, operation of protective equipment, or any other meaningful electric effect
on any FirstEnergy transmission facilities or systems. On August 25, 2010, ReliabilityFirst issued a Notice of
Enforcement to investigate the incident. FirstEnergy submitted a data response to ReliabilityFirst on September 27,
2010. At this time, FirstEnergy is unable to predict the outcome of this investigation.
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.