EPA alleges Clean Air Act violations at IPL's Petersburg plant | Crain's Indianapolis

EPA alleges Clean Air Act violations at IPL's Petersburg plant

Indianapolis Power & Light faces renewed risk of potential fines and capital expenditures after federal regulators issued the second violation in seven months involving its Petersburg generating plant.

The latest notice of violation, issued by the Environmental Protection Agency in February and revealed in a recently filed financial report with the federal government, alleges IPL made upgrades to the plant without obtaining necessary permits. Such permits are required to ensure a utility is using the best-available pollution control technology.

The notice is similar to a third, still-pending notice the EPA issued in 2009 alleging IPL updated three of its generating plants over 23 years without adding the most modern pollution controls, according to EPA records.

IPL spokeswoman Brandi Davis-Handy said her company and EPA officials have been in communication regarding the February notice of violation.

She added that IPL completes a thorough evaluation of potentially applicable environmental regulations and permitting requirements before beginning projects at its plants.

Violations can result in significant costs to utilities and ratepayers.

In 2007, the EPA reached a $75 million settlement with American Electric Power in a case that involved similar allegations of plant upgrades made without necessary permits, according to the EPA. The Columbus, Ohio-based AEP also agreed to make more than $1.2 billion in additional sulfur- and nitrogen-control upgrades to make amends, the agency said at the time.

The AEP case took eight years to be settled.

IPL acknowledged in a federal report the potential specter of an EPA action looming as a result of the 2009 investigation the agency began involving New Source Review Requirements of the Clean Air Act.

“Settlements and litigated outcomes of similar New Source Review cases have required companies to pay civil penalties, install additional pollution control technology on coal-fired electric generating units, retire existing generating units and invest in additional environmental projects,” IPL’s holding company, IPALCO Enterprises, wrote.

A similar outcome in IPL’s case, “could have a material impact on our business.”

IPL stated in its recent federal report that it has met with the EPA regarding the 2009 notice of violation but that it cannot predict the outcome. IPL also met with EPA staff regarding the October violation but “it is too early to determine whether the (notice of violation) could have a material impact on our business.”

The violation notice issued last October alleges IPL’s Petersburg plant emitted excessive particulates.

In 2014, IPL said it planned to spend $326 million by the end of 2016 to comply with the EPA’s latest Mercury and Air Toxics Standards.

IPL is spending millions of dollars converting its Harding Street generating station from coal to natural gas units, the company announced last year. The utility also is spending about $600 million to build a 671-megawatt gas-fired station to replace coal-fired units at its Eagle Valley station, 30 miles south of Indianapolis.

A consumer group representing ratepayers before the Indiana Utility Regulatory Commission said it was not aware of the latest violation notice EPA issued to IPL.

Kerwin Olson, executive director of Citizens Action Coalition, said IPL officials made no mention of the violation at a public advisory meeting last month on IPL’s Integrated Resource Plan. The 20-year forecast required by regulators outlines how IPL will provide reliable electric service.

“Part of the IRP process is a risk analysis related to current assets. One would think a (notice of violation) regarding Petersburg would be ‘risk,’” Olson said. “Future environmental risk and costs involved with those risks are part of the planning process.”

Pictured: The Indianapolis Power & Light building downtown. | Photo via Wikimedia Commons.

May 5, 2016 - 12:54pm