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Contact: Elaine Makatura


Conectiv Commits to Compliance Schedule and Community Benefit Project

(02/35) Trenton, NJ--- The New Jersey Department of Environmental Protection (DEP) has reached an enforcement settlement with Atlantic City Electric Company and Conectiv Atlantic Generation, Inc. (Conectiv), requiring the company to reduce smog-forming pollution at six of its generating stations located in southern New Jersey. The settlement also requires Conectiv to pay $2 million in penalties to the state, $1 million of which may be used to fund an urban re-forestation project in the affected airshed. The company estimates the cost to install, test, maintain and monitor new pollution controls required by the agreement will reach $3 million.

Conectiv is currently violating its regulatory limits for nitrogen oxides (NOx) emissions, which contribute to the formation of ground-level ozone or smog. Smog can trigger serious health problems and restrict the amount of time people with asthma and other respiratory sensitivities can spend outdoors.

"Our bottom line goal with this settlement is to improve air quality in New Jersey by having Conectiv lower NOx emissions at these six facilities and come into compliance with state-wide standards," said DEP Commissioner Bradley M. Campbell. "Today's agreement also sets a precedent for enforcement settlements in New Jersey that recognize the impact of dirty air on forest health and natural resources and provides extra benefits for communities. Conectiv has agreed to a $1 million tree-planting project that will not only help improve air quality but also improve the quality of life in urban neighborhoods."

To comply with its NOx emission limits, the company has agreed to install water injection equipment technology on the jet turbine engines. To ensure the pollution reductions are achieved, Conectiv will install the new equipment and monitor emission levels in three phases. In the first phase, the company will install and begin testing the water injection technology at one facility by May 1, 2003. If air-monitoring results show the new controls are effective, Conectiv must have the control equipment operating at two more facilities by May 1, 2004. The third phase requires that the company be in full compliance with NOx requirements at each of the six facilities by May 1, 2005. In the event this specific control technology does not adequately reduce NOx pollution levels, Conectiv must propose another control option that can attain the same or greater emission reductions.

Based on Conectiv operating data for 2000, DEP estimates that NOx emissions at these six facilities will be reduced by approximately 250 tons per year once water injection technology is installed at all six facilities. If the facilities operate at the maximum allowable number of hours, DEP estimates an approximate reduction of up to 840 tons of NOx per year.

In May 1995, DEP established air quality regulations requiring companies to install reasonably available control technology (RACT) in order to comply with mandated emission controls in the federal Clean Air Act. Claiming that control technologies needed for its facilities were not "reasonably" available, Conectiv attempted to comply with NOx limits by seeking alternate emission limits and purchasing emission credits to "cover" excess emissions. Through the state's Open Market Emissions Trading (OMET) program, companies that reduce NOx emissions beyond their allowable levels can sell those extra pollution reductions as credits in an open market. Conectiv purchased such credits beginning in 1998; however, the company failed to purchase the required number of credits and misused the credits it did buy.

The state requires companies that rely on emission credits during the high ozone season - the warmer months of the year - to purchase and use credits that are based on pollution reductions achieved during the same period. DEP recently determined that some of the emission reduction credits used by Conectiv during ozone seasons were not generated during an ozone season. As a result, DEP alleged that Conectiv was in violation of its emission limits.

Conectiv also initiated discussions with DEP regarding its belief that there was a current shortage of emission credits on the open market, highlighting the probability that the company would not meet its ongoing and future permit limits. To address past NOx emission violations and to allow the six facilities to continue operating this summer, DEP, working with the Department of Law and Public Safety's Division of Law, and Conectiv have agreed to this settlement, the terms of which are outlined in Administrative Consent Order effective today.

Campbell added: "This case highlights the need to re-evaluate New Jersey's failed emission trading program. We need to ensure that communities are not short changed on the air quality benefits the program is supposed to achieve and that responsible companies are not misled about their obligations under the law."

The re-forestation part of the settlement is an innovative enforcement mechanism known as a "supplemental environmental project," that is used to benefit local communities and, in this case, improve air quality. The Administrative Consent Order requires that the re-forestation project occur in urban areas in the Philadelphia-Wilmington-Trenton airshed, an area which currently has ozone levels above federal ambient air quality standards. Trees can absorb and reduce levels of ozone, nitrogen dioxide, and some particulate matter. In some cases, trees have been shown to reduce up to 15 percent of ozone, 14 percent for sulfur dioxide, 13 percent for particulate matter and 8 percent for nitrogen dioxide in their midst.

Further, Conectiv is required to take whatever additional actions are necessary at these units in order to comply with all federal, state, and local permits, rules and regulations. Conectiv must submit quarterly progress reports to the department with the first report due July 30, 2002. Each report will explain the status of Conectiv's compliance with this settlement.

Conectiv's six power generating facilities included in the settlement signed today are: Carlls Corner Generating Station in Upper Deerfield Township, Cumberland County; Middle Generating Station in Rio Grande Township, Cape May County; Missouri Generating Station in Atlantic City, Atlantic County; Cedar Generating Station in Manahawkin Township, Ocean County; Mickleton Generating Station in Greenwich Township, Gloucester County; and Deepwater Generating Station in Pennsville Township, Salem County. The jet engine turbines at these six facilities primarily operate during the summer when electrical demand is at a seasonal peak. In 2000, actual hours of operation for these units ranged from 131 hours to 653 hours - the equivalent of five to 27 days out of the year.

If Conectiv cannot meet its pollution limits, the company will have to terminate operations at the affected facilities.




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