May 26, 2005

SALEM POWER PLANT SETTLEMENT ENSURES ENVIRONMENTAL COMPLIANCE, REGIONAL GRID RELIABILITY

Romney Administration, Dominion, Mayor Usovicz, advocates sign agreement

The Romney Administration today joined with Dominion, Salem Mayor Stanley J. Usovicz, Jr., HealthLink, the Conservation Law Foundation (CLF) and other health and environmental advocacy groups to announce that they have signed an amended consent order to bring the Salem Harbor power plant into compliance with the state’s toughest-in-the-nation emission regulations, enabling the plant to continue to contribute to the reliability of the New England power grid.

Dominion, which purchased the facility early this year, has agreed to meet the stringent environmental requirements in the Department of Environmental Protection’s clean air regulations.

Governor Mitt Romney called the settlement a win-win solution. “When I first took office, I identified the cleanup of Salem Harbor Station as a priority,” Romney said. “Today, I am pleased to announce that we have worked with Dominion, Mayor Usovicz, the environmental and health advocates, the unions and regional grid operators to ensure that Salem Harbor Station will continue to provide reliable electric service in New England, but will be upgraded and operated to quickly come into full compliance with the state’s air emission limits.”

The amended consent order requires Dominion to start taking immediate action to ensure short- and long-term environmental compliance at the facility. Among other things, Dominion will implement a program to burn low-emission coal (Low-E coal) at the plant. The Low-E coals, which are low-NOx-emitting and low-sulfur-bearing coals, are significantly more expensive than coals typically used at power plants in the United States.

Under the order, Dominion will immediately implement its Low-E coal program. Beginning October 1, 2005, Dominion is required to comply with the power plant regulation limits for sulfur dioxide (SO2), mercury, and carbon dioxide (CO2), just like the other facilities subject to the regulation. Dominion is also required to comply with the NOx limits, through actual reductions at the plant and the limited use of credits earned from prior emission reductions.

Dominion is also improving its coal-handling procedures and is designating a company representative to field inquiries from the public on dust issues, so that any perceived problems can be addressed in a timely manner.

Mayor Usovicz hailed the efforts of the parties involved in the negotiations. “This agreement insures that the Salem Harbor Power Plant will continue to provide much-needed power generation to the North Shore for many years to come, while saving the jobs of many North Shore residents, and helping to stabilize Salem’s industrial tax base,” Usovicz said. “Throughout these negotiations, I fought to see that a proper balance was achieved between the important goals of the environmental regulations and the economic concerns of Salem businesses, taxpayers, and the entire North Shore economic engine that Salem represents. This settlement agreement is a win-win for everybody; truly a job well done.”

Lt. Governor Kerry Healey also noted that the settlement represents the good faith and hard work of all the parties to achieve environmental compliance at the plant. “We are especially pleased that the consent order provides certainty of environmental compliance both for the short-term and the long-term,” Healey said. “The Low-E coal program is an innovative solution to bring the facility into compliance quickly.” Dominion will buy and burn coals that will lower NOx and SO2 emissions, while continuing compliance with mercury and CO2 standards.

“Since 1998, we have worked to improve the community’s health by reducing exposure to power plant pollution. This agreement is another step on the long road toward that goal,” said Jane Bright of HealthLink. “And, over the next several years, HealthLink and our colleagues at Clean Water Action, the Conservation Law Foundation, MassPIRG, and the Wenham Lake Watershed Association will continue working with the state, community, unions, the plant owners and the city as the reductions are implemented, new decisions must be made, and the many benefits from our tough pollution regulations are realized.”

“CLF is proud to have represented and worked with a broad coalition of environmental, community and health organizations in shaping this latest chapter in the long story of implementation of the Massachusetts power plant regulations – a chapter that will bring immediate reductions in air pollution, even greater long-term emissions reductions and a pathway for open decision making about the future of the plant, a future that will include full compliance with these critical environmental regulations and puts responsibility for paying for this compliance in the place it belongs, on the shoulders of the owner of the plant,” said CLF Senior Attorney Seth Kaplan.

"All parties should be congratulated in reaching these agreements. New England, the Commonwealth of Massachusetts and the City of Salem will benefit both from the cleaner emissions and a steady, reliable flow of electricity from Salem Harbor," said David A. Heacock, Dominion vice president-Fossil & Hydro.

The amended order is part of a comprehensive settlement of issues concerning Salem Harbor Station. Today, the Commonwealth, Dominion, the City of Salem, and the environmental groups jointly filed settlement documents in proceedings before the Federal Energy Regulatory Commission (FERC), along with unions representing the Salem Harbor workforce, and the New England ISO, which operates the New England power grid.

The FERC settlement will provide Dominion with a fixed amount of funding, $6.75 million over 24 months, from ratepayers to settle the litigation. Dominion will absorb all costs associated with continued operation of the facility and the necessary environmental upgrades to comply with DEP regulations, including installation of certain fire suppression equipment and significantly increased fuel costs. The upgraded fire suppression equipment will allow the plant to use the wider variety of Low-E coals.

This fixed amount minimizes, to the extent possible, the price impact on consumer’s monthly bills. On average, the cost to customers on a monthly basis is a few cents.

The FERC settlement also ensures reliability of the New England power grid and prohibits Dominion from seeking to recover any additional ratepayer funding until at least September 30, 2008.

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