Market News

 October 11, 2007
AEP to Pay More Than $4B to Cut Emissions

 Washington, D.C., USA -- American Electric Power will spend more than $4.6 billion to cut air pollution and mitigation projects to improve air quality in the Northeast U.S. as part of a settlement with the U.S. Environmental Protection Agency (EPA)and Department of Justice.

The EPA is calling the settlement the largest in history. It includes a $15 million penalty, and funds that will be dedicated to slashing more than 813,000 tons of sulfur dioxide and nitrogen oxide emissions per year. Mitigation projects also will be implemented to improve the impact of past emissions.

"Today's settlement will save $32 billion in health costs per year for Americans," said Granta Nakayama, assistant administrator for EPA's enforcement and compliance assurance program. "Less air pollution from power plants means fewer cases of asthma and other respiratory illnesses."

Separately, the settlement comes a week after the release of a University of Michigan study that suggests that a majority of firms in the electric utilities industry participating in the Department of Energy's (DOE) voluntary emissions reporting program actually produce more emissions but report reductions.

"The problem is not that companies are lying but rather that they are taking advantage of lax and inconsistent reporting rules," said Thomas Lyon, the study's co-author and professor and director of the university's Erb Institute for Global Sustainable Enterprise. "Until these reporting loopholes are closed, the registry runs the risk of merely being a greenwashing tool for companies worried about their image."

The DOE issued a revised set of guidelines for the voluntary program in 2006, the last year in which data used in the study was available.