Westar Energy, Inc. Settlement

(WASHINGTON, D.C. - January 25, 2010) Westar Energy has agreed to spend approximately $500 million to significantly reduce harmful air pollution from a Kansas power plant and pay a $3 million civil penalty, under a settlement to resolve violations of the Clean Air Act, the Justice Department and the U.S. Environmental Protection Agency (EPA) announced today. As part of the settlement, Westar will also spend $6 million on environmental mitigation projects.

On this page:

• Overview of Company and Facility Location
• Violations
• Injunctive Relief
• Pollutant Reductions
• Health and Environmental Effects
• Environmental Mitigation Projects
• Civil Penalty
• State Partners
• Comment Period
• The Power Plants Enforcement Effort

Overview of Company and Facility Location

Westar Energy is a Kansas corporation headquartered in Topeka, Kan. The utility employs about 2,400 people and serves more than 684,000 customers in much of east and east-central Kansas. It generates more than 6,800 megawatts (MW) of electricity and operates 35,000 miles of transmission and distribution lines.

Westar Energy owns and operates eight coal-fired units in Kansas at the following locations:

• Jeffrey Energy Center, St. Marys
• Lawrence Energy Center, Lawrence
• Tecumseh Energy Center, Tecumseh

The units are collectively capable of producing about 2,950 MW.

This settlement covers all three coal-fired electric generating units at the Jeffrey Energy Center, which comprise 2,160 MW, or 73 percent of Westar's coal fleet. The three coal-fired units covered by this settlement began commercial service in 1978, 1980, and 1983.

Violations

In February 2009, the United States filed a complaint in federal district court alleging that Westar Energy made modifications at the Jeffrey Energy Center without first complying with pre-construction obligations, including obtaining pre-construction permits and installing and operating state-of-the-art pollution control technology, in violation of:

• The Clean Air Act (CAA) Prevention of Significant Deterioration provisions, 42 U.S.C. §§ 7470-7492 and the Kansas State Implementation Plan (SIP)
• Title V of the CAA and the Kansas Title V regulations

Injunctive Relief

The consent decree secures injunctive relief from all three units at the Jeffrey Energy Center. When all controls are installed, the settlement will result in substantial reductions of nitrogen oxide (NO_x) and sulfur dioxide (SO₂) emissions by over 78,600 tons per year from 2007 levels. The cost of the injunctive relief required by this consent decree through the end of 2016 is estimated to be $490-$550 million. The settlement will require Westar to:

• Install and continuously operate year-round a selective catalytic reduction device (SCR) on at least one unit to reduce NO_x emissions, and elect to either meet a plant-wide NO_x emission rate of 0.100 lb/mmBtu (pound per million British thermal units of heat input) or install a second SCR
• Continuously operate flue gas desulfurization (FGD) for the control of SO₂ to meet the most aggressive SO₂ rates in any New Source Review utility settlement to date
• Optimize existing particulate matter (PM) controls and achieve and maintain significant PM reductions
• Comply with unit-specific emission rates for SO₂, NO_x­, and PM
• Annually surrender any excess SO₂ and NO_x­ allowances resulting from the installation and operation of the pollution control devices required by the consent decree

Pollutant Reductions

• The use of FGDs is expected to reduce annual SO₂ emissions by approximately 60,000 tons per year (compared to 2007 emissions)
• The use of SCR and other NO_x control technologies is expected to reduce annual NO_x­ emissions by approximately 18,600 tons per year (compared to 2007 emissions)

Health and Environmental Effects

The pollutants reduced under this settlement are known to have numerous adverse, significant environmental and health effects. Sulfur dioxides and nitrogen oxides can be converted to fine particulate matter once in the air. Fine particulates can be breathed in and lodged deep in the lungs, causing a variety of health impacts, including premature death. Other health and environmental impacts from the pollutants addressed in this settlement include the following:

• Sulfur Dioxide - High concentrations of SO₂ affect breathing and may aggravate existing respiratory and cardiovascular disease. Sensitive populations include asthmatics, individuals with bronchitis or emphysema, children and the elderly. Sulfur dioxide is also a primary contributor to acid deposition, or acid rain.

• Particulate Matter - Short term exposure to particulate matter can aggravate lung disease, cause asthma attacks and acute bronchitis, may increase susceptibility to respiratory infections and has been linked to heart attacks and premature mortality.

• Nitrogen Oxides - Nitrogen oxides can cause ground-level ozone, acid rain, particulate matter, global warming, water quality deterioration, and visual impairment. Nitrogen oxides play a major role, with volatile organic chemicals, in the atmospheric reactions that produce ozone. Children, people with lung diseases such as asthma, and people who work or exercise outside are susceptible to adverse effects such as damage to lung tissue and reduction in lung function.

Environmental Mitigation Projects

This settlement also requires Westar to spend $6 million on environmental mitigation projects to address the impacts of past emissions. The $6 million may be spent on the following projects identified in Appendix A of the Consent Decree:

• Clean diesel retrofit project for vehicles owned by or operated for public entities in Kansas
• Third party wind generation that will result in the reduction of criteria pollutants and greenhouse gases, and provide electricity to a school or nonprofit
• Advanced truck stop electrification to reduce harmful emissions from idling trucks
• Installation of plug-in hybrid infrastructure to facilitate the use of plug-in hybrid vehicles
• Conversion of vehicles in Westar's fleet to reduce pollution by retrofitting diesel vehicles and purchasing hybrid vehicles

Civil Penalty

Westar will pay a total of $3 million in civil penalties. The company will pay $2.75 million in civil penalties to the United States and $250,000 in penalties to the state of Kansas within 30 days of entry of the settlement.

State Partners

The state of Kansas is a party to the settlement.

Comment Period

The proposed settlement, lodged in the U.S. District Court for the District of Kansas, is subject to a 30-day public comment period and final court approval. Information on submitting comment is available at the Department of Justice website.

The Power Plants Enforcement Effort

The United States has filed lawsuits against several other utilities for alleged violations of the CAA. This series of cases seeks to bring the power plant industry into full compliance with the New Source Review and Prevention of Significant Deterioration requirements of the Clean Air Act. This settlement with Westar Energy represents the eighteenth judicial settlement under the power plants enforcement effort.

The United States has reached similar settlements with the following utilities:

• Duke Energy
• Kentucky Utilities Company
• Salt River Project Agricultural Improvement and Power District
• American Electric Power
• East Kentucky Power Cooperative
• Nevada Power Company
• Alabama Power
• Minnkota Power Cooperative and Square Butte Power Cooperative
• First Energy (Ohio Edison Company, W.H. Sammis Power Station)
• Illinois Power Company and Dynegy Midwest Generation
• Southern Carolina Public Service Authority (Santee Cooper)
• Southern Indiana Gas and Electric Company Culley Station
• Wisconsin Electric Power Company
• Virginia Electric Power Company
• Alcoa, Inc. (Rockdale, Texas facility)
• PSEG Fossil, and Tampa Electric Company

The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will be about 2 million tons each year once all the required pollution controls have been installed and implemented. More information about these settlements is available at the Coal-Fired Power Plant Enforcement Initiative.

For additional information, contact:

Shaun Burke
U.S. Environmental Protection Agency (2242A)
1200 Pennsylvania Ave., N.W.
Washington, DC 20460-0001
(202) 564-1039
[email protected]

Jeff A. Kodish
Attorney-Advisor
OECA/AED/Western Field Office (8MSU)
1595 Wynkoop Street
Denver, Colorado 80202
(303) 312-7153
[email protected]