South Carolina Utility Santee Cooper Agrees to Clean Air Settlement

By Kyle Stock, The Post and Courier, Charleston, S.C. -- Mar. 17

Santee Cooper, one of the country's largest state-owned utilities, will install $100 million in pollution-control devices and pay a $2 million penalty to settle what the Department of Justice viewed as violations of the Clean Air Act.

The Justice Department and the Environmental Protection Agency said Tuesday the Moncks Corner-based utility violated emissions regulations several times in recent years by upgrading its Winyah and Cross coal-burning power plants in Berkeley County without permits required under provisions of the Clean Air Act.

The plants are close to the Cape Romain National Wildlife Refuge.

During an inspection last May, the state Department of Health and Environmental Control found Santee Cooper crews had illegally started construction of a new, long-planned coal-burning unit at its Cross facility. The utility had applied for permits to build the site more than a year earlier, but DHEC hadn't OK'd the project yet.

The agreement filed Tuesday was the product of months of negotiations between Santee Cooper, the Department of Justice, EPA and DHEC.

The pollution controls will be in place by 2009 and are expected to cut nitrogen oxide emissions by 70 percent and sulfur dioxide emissions by half. A total of about 67,000 tons of harmful pollutants are expected to be eliminated annually. Both pollutants are significant contributors to acid rain, smog and childhood asthma. The vast majority of Santee Cooper's generating capacity -- about 75 percent -- is generated by burning coal, a relatively dirty fuel source.

The $100 million price tag for the improvements will be tacked onto $1.4 billion the utility plans to spend on capital improvements over the next few years. Santee Cooper will cover most of that sum with bond issues and said no rate increases will be necessary.

As part of the settlement, a $1.2 million fine will be levied by the state and a $700,000 penalty will be exacted by DHEC. It is one of the largest penalties imposed by the agency in years.

The state and Berkeley County will each get $350,000 of that sum. Santee Cooper also will spend $4.5 million to finance pro-environment initiatives, including $1.25 million for land conservation in South Carolina and $1 million to develop more energy-efficient technologies.

"What this does is buy flexibility and certainty," John West, executive vice president and chief legal officer at Santee Cooper, said of the settlement.

Environmental groups said they were "cautiously optimistic" about the settlement.

"Any time a company settles with EPA towards compliance, that's a good thing; we think compliance is inevitable," said Ann Weeks, litigation director with the Clean Air Task Force, a Boston-based nonprofit. "We hope that some of the bigger players that have outstanding litigation will take note of the fact that it seems as though the EPA and DOJ are continuing to pursue this."

In 1999, under the Clinton administration, the EPA started enforcing what's referred to as New Source Review, regulations that require coal-burning power plants to apply for new permits if they undergo any upgrades beyond "routine maintenance."

The government, joined by a number of states, fired a volley of lawsuits charging utilities with not upgrading pollution controls.

Most of the suits, which include actions against Charlotte-based Duke Energy Corp. and Atlanta-based Southern Co., are still open.

Santee Cooper wasn't targeted in that sweep, but it did join dozens of other utilities on a list of companies scrutinized by the EPA.

The Bush administration moved to loosen enforcement of the EPA air regulations, arguing that removing costly regulations would make plants more efficient and therefore cleaner.

The proposed changes were met with criticism from environmental groups and lawsuits from a number of states.

Santee Cooper, as a large utility aggressively expanding its coal-burning capacity, had every reason to believe that a lawsuit would be heading its way by the November presidential elections.

However, its executives maintain that the company never violated the Clean Air Act and is acting preemptively by brokering the settlement in expectation that emission regulations will get more restrictive -- not less -- in the future.

"We can sit here and hedge our bets, or we can grab the bull by the horns and get this thing done," said West.

The utility will add new sulfur dioxide scrubbers to two units at the Winyah plant in Georgetown.

It will also upgrade existing scrubbers at the two other Winyah turbines and two generators at its Cross power plant.

The Winyah and Cross facilities comprise almost half of Santee Cooper's generating capacity.

The upgrades give Santee Cooper a measure of confidence as it moves forward with an expansion of its Cross coal-burning plant that will boost its generating capacity by 20 percent.

The utility ranked 34th in the nation in terms of toxic chemical air emissions, releasing about 4.3 million pounds of airborne toxic chemicals in 2001, mostly from its Jefferies and Winyah plants, according to the nonprofit environmental group Clear the Air.

South Carolina Electric & Gas, the state's other big utility, was 26th on the Clear the Air list, with about double the toxic emissions.

"Overall, this is a good sign," said Jill Johnson, Southeast field director for Public Interest Research Group, a network of consumer advocacy groups. "The Winyah power plant is definitely one of the dirtier plants in the country, so it's exciting to see that they're going to clean up that facility."

Five of the utility's coal-burning units are scrubbed, while about 93 percent of the coal-burning plants in the Carolinas and Georgia don't have sulfur dioxide scrubbers.

South Carolina ranked 14th on a list of the most air-polluting states released in December by Clear the Air. North Carolina topped that list.


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