Maryland Department of the Environment, Attorney General Announce
Settlement to Reduce Emissions from Out-of-State Power Plants

BALTIMORE MD (October 9, 2007) – The Maryland Attorney General’s Office and the Maryland Department of the Environment today joined the United States, seven other states, and 13 citizen groups in announcing a Clean Air Act settlement agreement with American Electric Power Service Corporation (AEP) that is unprecedented in scope. Under the terms of a Consent Decree lodged this morning with the United States District Court for Ohio, AEP will reduce emissions of nitrogen oxides from 16 coal-fired power plants comprising AEP’s Eastern System by 69% from 2006 levels. Emissions of sulfur dioxide will decline by 79% from 2006 levels. When fully implemented, the Decree will eliminate 813,000 tons of air pollution each year.

The settlement requires the installation and continuous operation of state-of-the-art nitrogen oxide and sulfur dioxide pollution control technology at an estimated cost to AEP of more than $4.6 billion.

“More than 90% of Maryland citizens live in areas that do not comply with federal ambient air quality standards,” said Secretary Shari T. Wilson. “Through enactment of the Healthy Air Act, Maryland has imposed new stringent emission limitations on our own coal-fired power plants, but much of Maryland’s poor air quality is the result of transport from upwind out-of-state power plants and other sources. This settlement represents a major victory in our efforts to reduce transport of air pollution from out-of-state sources.”

“Maryland residents have long been subjected to the harmful emissions from out-of-state, upwind power plants,” said Attorney General Douglas F. Gansler. “This settlement, the largest of its kind
in history, is the result of a solid, coordinated enforcement effort among federal and state officials, and environmental organizations. Once implemented, this settlement will have a significant and positive impact on Maryland’s air quality.”

Under the terms of the settlement agreement, AEP will pay a $15 million penalty, the highest penalty paid by any electric utility in settlement of a New Source Review case. AEP has also committed $60 million to perform or finance environmental mitigation projects to address the impacts of past emissions. Of this amount, $24 million will be distributed to Maryland and the other seven plaintiff states to fund projects in those states. Three million dollars is specifically earmarked for projects that will address pollution in the Chesapeake Bay.

This settlement resolves a lawsuit filed against AEP in 1999 by EPA, a total of eight states and 13 environmental organizations alleging violations of New Source Review permitting requirements under the Clean Air Act involving 30 units at 11 AEP power plants.