PSEG Fossil, a subsidiary of PSEG Power, has agreed to spend $337 million on state-of-the-art pollution controls over 10 years at two of its New Jersey powerplants under a settlement with the U.S. Dept. of Justice, Environmental Protection Agency and the state of New Jersey. The company also will pay a $1.4-million civil penalty and spend at least $6 million on three additional projects partly to offset the impact of past emissions.

The agreement, announced Jan. 24, is the second of its kind under federal "new source review" rules adopted in the mid-1990s as part of the Clean Air Act. The first such settlement was in January 2000 between the federal government and Tampa Electric Co.

The government says the planned PSEG controls will cut sulfur dioxide emissions by 36,000 tons per year, or 90%, and nitrogen oxide emissions by 18,000 tons, or 80%, from the company's coal-fired powerplants in Jersey City and Hamilton, N.J.

The settlement, filed in U.S. District Court in Newark, N.J., resolves federal and state allegations that the PSEG plants operated unlawfully because they were modified without installing the updated pollution controls mandated by the new source review program.

The government says PSEG Fossil will install scrubbers to remove SO2 and selective catalytic reduction systems to combat NOx emissions. The company also will upgrade effectiveness of its existing control devices for particulate matter at both facilities. PSEG will install one additional particulate control device, which will eliminate more than 1,000 tons per year of that pollutant.

Installation of the controls will be phased in, beginning with upgrading the PM controls this year, installing SCRs in 2004 and scrubbers in 2006. All work is expected to be completed by 2012. Further, the company will reduce its emissions of carbon dioxide by 15%; contribute to New Jersey's ongoing efforts to recover and use methane gas from landfills; and develop technology to reduce and monitor emissions of mercury from its plants.

The settlement also requires PSEG Fossil to retire allowances and credits that it or other companies could use to emit additional pollution.

Tom Sansonetti, Justice's assistant attorney general for environment and natural resources, says "We hope other utilities will follow PSEG's lead." The U.S. has several new source cases pending against other utilities.

The PSEG settlement comes just nine days after Justice announced results of a review that determined those cases and pending settlements could move forward.