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Washington — Consumers Energy, the second-largest utility in Michigan, will spend $1 billion to upgrade pollution controls at five coal-fired powered plants in the state under a settlement reached with the Justice Department on Tuesday.

The unit of CMS Energy Corp. has agreed to install pollution control technology, continue operating existing pollution controls and comply with emission rates to reduce pollution at plants in West Olive, Essexville, Muskegon and Luna Pier, the Justice Department and Environmental Protection Agency said as part of a consent decree.

The settlement requires Consumers Energy to pay a civil penalty of $2.75 million to resolve Clean Air Act violations and spend at least $7.7 million on environmental projects to help mitigate the harmful effects of air pollution on the environment and benefit local communities.

The money involved in the settlement won’t be included in the utility’s next rate request because the dollars are already accounted for in current rates, said Consumers Energy spokesman Dan Bishop. The anti-pollution upgrades were already being done or the utility had a commitment to do them, he said.

The agreement gives Consumers “legal certainty on this issue, benefits customers because it’s very economical, and means environmental improvements for Michigan,” Bishop said in an email.

The settlement will resolve claims that the company violated the Clean Air Act by modifying the plants in a way that caused the release of excess sulfur dioxide and nitrogen oxide.

The EPA expects the actions required by the settlement will reduce harmful emissions by 46,500 tons per year. Consumers Energy estimates it will spend approximately $1 billion to implement the required measures, the Justice Department said. “The pollution reductions will be achieved through the installation, upgrade and operation of state-of-the-art pollution control devices designed to reduce emissions and protect public health,” the government said. It said Consumers Energy will also take several coal-fired units offline and may re-power additional coal-fired units with natural gas.

“Today’s settlement will bring cleaner air to residents in Michigan by removing tens of thousands of tons of harmful air pollution from the atmosphere,” said Acting Assistant Attorney General Sam Hirsch of the Justice Department’s Environment and Natural Resources Division. “This agreement will render benefits to communities far into the future with pollution-reduction projects that will improve public health and help restore natural resources downwind of the plants.”

The consent decree will be open for public comment for 30 days before a federal judge is asked to approve it.

“The required pollution controls and funding for mitigation projects will reduce harmful pollution in American communities,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “This case demonstrates that energy can be provided to local communities in a responsible way that significantly reduces sulfur dioxide and nitrogen oxide known to contribute to serious health concerns.”

The settlement requires that the company install pollution control technology and implement other measures to reduce sulfur dioxide and particulate matter emissions from its five coal-fired power plants, comprising 12 operating units. Under the settlement, the company must retire or refuel two units to natural gas and retire an additional five units.

Consumers Energy said the agreement does not include any admission of wrongdoing on the part of the company. The company said it is one of many U.S. energy providers, including numerous Midwest utilities, “whose routine maintenance, repair and replacement in electric generation facilities were reviewed as part of the EPA’s Coal-Fired Power Plant Enforcement Initiative that began in 1999. The initiative has resulted in more than 25 settlements nationwide.”

“Today’s settlement concludes over five years of negotiation with the EPA and U.S. Department of Justice, and fully resolves these issues with the government,” said John Russell, Consumers Energy’s president and chief executive officer. “We’re moving forward with our plan to continue to improve air quality, move to a cleaner generation portfolio, and provide Michigan homes and businesses with safe, affordable and reliable energy.”

Overall, Consumers Energy will spend more than $2 billion in upgrades at its power plants to help produce the cleanest air in Michigan in the last 50 years, the company said.

The EPA in 2007 and 2008 alleged that Consumers Energy had violated federal environmental regulations. The issues involved smoke density emitted by power plants and requirements to obtain certain permits and install emissions-control equipment.

Of the settlement, $500,000 will go to the National Park Service for the restoration of land, watersheds, vegetation and forests or combating invasive species in Sleeping Bear Dunes National Lakeshore Park and Cuyahoga Valley National Park in Ohio.

The remaining $7.2 million will be spent on a series of mitigation projects. Potential projects include efforts to reduce vehicle emissions, install renewable energy and energy efficiency projects, replace or retrofit wood-burning appliances, and protect and restore ecologically significant lands in Michigan. Consumers Energy has five years to complete its selected projects.

Consumers Energy provides electricity to more than 6 million people in the Lower Peninsula.

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