BILLINGS, Mont. (AP) -- PPL Montana has agreed to install an estimated $10 million in new pollution controls at a Billings power plant if the company reverses its plan to close the facility in less than two years, state officials and company representatives said Monday.
PPL also agreed to a $250,000 penalty for past pollution violations.
The legal settlement would reduce future sulfur dioxide pollution from the 154-megawatt J.E. Corette coal plant by 60 percent from current levels, said Tracy Stone-Manning, director of the Montana Department of Environmental Quality.
"It means cleaner air in Billings," she said, adding that other steps to be taken by the company would improve visibility by reducing particulates emitted from the plant's smokestack.
The new equipment would have to be in place by April 2015.
PPL said last year that it would mothball the 45-year-old plant by that date, citing environmental regulations and competition from other power sources that has made coal more expensive to burn.
The announcement just weeks before the 2012 election was seized on by Republicans including U.S. Senate candidate Denny Rehberg and gubernatorial candidate Rick Hill, who blamed Democrats for the pending loss of Corette's 35 jobs. Neither candidate prevailed in November.
PPL spokesman Dave Hoffman said the company still intends to mothball the plant, but it could re-open at a later date.
Sulfur dioxide can cause respiratory illnesses, particularly in children, the elderly and asthmatics. The estimated $10 million that would be needed for PPL to achieve the 60 percent reduction was provided by Dave Klemp, DEQ's air pollution bureau chief.
Hoffman could not confirm the cost figure.
But he said that to be fully in compliance with federal air pollution laws, the company would have to install $38 million in equipment that removes other air pollutants.
"At this point, conditions haven't changed adequately to justify that investment even though the market has been a little stronger than we anticipated," Hoffman said. "It's a two-year lead time for construction. In any event, you're going to see some period of retirement starting in April 2015."
Stone-Manning said the agreement with PPL underscores the state's contention that it is addressing federal regulators' concerns about high sulfur dioxide levels in Yellowstone County.
The U.S. Environmental Protection Agency earlier this year said it intends to declare the county a "non-attainment area" for the pollutant, which could mean tighter regulations for industry. State officials have fought against the designation and argued that the agency was not gauging pollution levels appropriately.
Stone-Manning said that becomes "irrelevant" if Corette — one of Yellowstone's largest sources of sulfur dioxide — achieves a 60 percent reduction.
But Anne Hedges with the Montana Environmental Information Center said that ignores other major sources of sulfur dioxide in the county that produce comparable amounts. She called the agreement with PPL a "backdoor attempt" to avoid the federal designation.
The agreement between PPL and the state also requires the company to take steps to reduce pollution and improve visibility both for Corette and another, larger PPL coal plant located in Colstrip.
The deal approved Friday by state District Judge Susan Watters does not require any new equipment to be installed to help with visibility. Rather, the company agreed to set up a task force to identify ways to make improvements.
The 2,100-megawatt Colstrip plant, co-owned by five companies and operated by PPL, is the second-largest coal-fired plant west of the Mississippi.