U.S. ANNOUNCES MAJOR CLEAN AIR ACT SETTLEMENT
WITH WISCONSIN ELECTRIC POWER CO.

WASHINGTON, D.C. - The Department of Justice and the Environmental Protection Agency today announced a $600 million Clean Air Act settlement with Wisconsin Electric Power Company (WEPCO), also known as We Energies. The settlement resolves the federal government’s claims that Wisconsin Electric violated the New Source Review (NSR) provisions of the Clean Air Act at several of its plants by undertaking major modifications and increasing emissions of air pollution without also installing required air pollution controls. The settlement is expected to eliminate more than 105,000 tons of harmful air pollutants annually from five coal-fired electricity generating plants in Wisconsin and Michigan.

Today’s settlement, initiated by the Bush Administration, is consistent with a series of cases pursued by the federal government to bring the coal-fired power plant industry into full compliance with the New Source Review requirements of the Clean Air Act. The agreement requires Wisconsin Electric to install state-of-the-art controls or elect to shut down units, representing 80 percent of its total coal-fired megawatt generating capacity. One-hundred percent of the units covered under the agreement must also comply with a declining system-wide rate and cap for sulfur dioxide (SO2) and nitrogen oxide (NOx).

AEPA continues to aggressively enforce the nation’s environmental laws, and it shows. Our air is cleaner as we continue to reach enforcement milestones,” said Christie Todd Whitman, EPA Administrator. “We expect companies to act responsibly and within the law when it comes to protecting public health and the environment.”

“Today’s settlement is another example of the Justice Department’s strong commitment to cleaning up our nation’s air,” said Assistant Attorney General Thomas L. Sansonetti. “Soon the residents of Wisconsin and Michigan will benefit from the drastic reductions in pollutants emitted from these facilities.”

It is estimated that the company will spend up to $600 million to reduce 72,300 tons per year of SO2 and 32,600 tons per year of NOx and improve its control of particulate matter (PM) from each of the plants included in the settlement. The company also will pay a $3.2 million civil penalty and spend at least $20 million to finance an environmental mitigation project demonstrating a new technology to significantly reduce mercury emissions from coal-fired power plants.

Wisconsin Electric is a large Midwestern coal-fired electric utility. The settlement covers five Wisconsin Electric plants, four in Wisconsin and one in Michigan, consisting of 23 electricity generating units. These five plants emitted over 147,000 tons of SO2 and NOx in 2001. Sulfur dioxide and NOx are significant contributors to acid rain; NOx also increases low-level ozone, which causes smog; fine particulate matter causes haze. All these pollutants cause severe respiratory problems and exacerbate cases of childhood asthma.

The settlement will achieve reductions through the installation of new pollution control equipment, the upgrading of existing pollution controls on several of the units in the Wisconsin Electric system, and through the retirement of some older units. This technology is required to be installed or upgraded on specified units in the Wisconsin Electric system.

Wisconsin Electric Power Company was a party in the litigation and landmark 1990 Seventh Circuit Court decision regarding the application of the Clean Air Act’s NSR standards to coal-fired utilities. The WEPCO coal-fired units that were at issue in the 1990 WEPCO decision will be shut down or controlled in 2004 under the settlement.

The WEPCO settlement is one of several major Clean Air Act settlements announced in April 2003. On April 21, the Department of Justice and EPA announced its largest CAA settlement with a utility in a case involving Virginia Electric and Power Company (VEPCO). Under the settlement, VEPCO agreed to spend $1.2 billion between now and 2013 to eliminate 237,000 tons of SO2 and NOx emissions annually from eight coal-fired electricity generating plants in Virginia and West Virginia. Also in April, the Justice Department and EPA announced two other CAA settlements with grain industry giant Archer Daniels Midland Company (ADM) and Alcoa, Inc. The settlement with ADM will cover operations at 52 plants in 16 states, cost the company an estimated $340 million and eliminate at least 63,000 tons of air pollution a year. Under the settlement with Alcoa, the company will spend an estimated $330 million to install a new coal-fired power plant with state-of-the-art pollution controls at Alcoa's aluminum production facility in Rockdale, Texas.

The WEPCO settlement was lodged today for a 30-day public comment period in the United States District Court in Milwaukee, Wisconsin.

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