Dominion resolves alleged air violations with EPA

Dominion Virginia Power, a unit of Dominion, will pay a $5.3 million civil penalty and the utility will begin making system-wide major reductions in its NOx emissions by 2004. The program to reduce emissions from the entire utility will cost $1.2 billion and be spread over 12 years. The air emissions reduction program agreed by Dominion and EPA removes the uncertainty about compliance with the provisions of the Clean Air Act.

Dominion Virginia Power, a unit of Dominion, will pay a $5.3 million civil penalty and the utility will begin making system-wide major reductions in its NOx emissions by 2004. The program to reduce emissions from the entire utility will cost $1.2 billion and be spread over 12 years.

The air emissions reduction program agreed by Dominion and EPA removes the uncertainty about compliance with the provisions of the Clean Air Act. With this settlement, EPA agrees not to ask for other investments or changes concerning Dominion Virginia Power and the Clean Air Act, says Dan Genest, spokesman for the company.

Shareholders reacted positively to the removal of the environmental uncertainties and sent the stock up 2.4%, or $1.43, to close at $60.75.

Specifically, Dominion will install two scrubbers at Mt. Storm that will remove up to 95% of all SO2 emissions. The scrubbers will be operational by 2002. The company will also install equipment to reduce NOx emissions on all three units at Mt. Storm.

Dominion chose to develop a broad pollution control plan for its other plants in addition to implementing changes EPA wanted at Mt. Storm rather than fighting the EPA in the courts.

�Even though our view remains that we operated Mt. Storm in full compliance with the Clean Air Act and in full accord with accepted industry standards and practices. We believed that the best approach was to be proactive and reach an agreement that was in the best interest of all involved,� said Thos. Capps, chairman and CEO of Dominion, in a statement.

Dominion will install selective catalytic reduction (SCR) systems at Mt. Storm that will decrease NOx emissions by about 16,500 tons each year. SCRs work like catalytic converters on a car. Flue gas containing the NOx emissions from the combustion process is mixed with ammonia. The mixed gases travel through a series of catalytic layers that cause the NO,sub>x to react with the ammonia. It converts the NOx to water and pure nitrogen, a benign chemical that makes up 80% of the air.

To be in place by 2002, the scrubbers will remove SO2 emissions in the amount of 50,000 tons of SO2 per year for two units of Mt. Storm. Scrubbers work by spraying a mixture of pulverized limestone and water into the exhaust gas of the generating units. Within the scrubber units, calcium in the limestone reacts with the SO2 to form gypsum.

Scrubbers will also be installed at Chesterfied Power Station unit 6 by 2010 and on unit 5 by 2012. An SCR system will be added also.

Dominion says the environmental program will not increase electric rates since they are frozen until 2007 under a Virginia restructuring plan.

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