# PSEG Fossil LLC Amendment to 2002 Consent Decree

Fact Sheet

November 30, 2006

Overview: On July 26, 2002, the United States District Court for the District of New Jersey

approved a judicial settlement between the Un ited States Environmental Protection Agency

(USEPA), the State of New Jersey, and PSEG Fossil LLC (“PSEG Fossil”) to resolve PSEG

Fossil’s violations of the Clean Air Act. Th e settlement required PSEG Fossil to install and

operate state-of-the -art controls for sulfur dioxide (SO 2 

# ), nitrogen oxide (NO

x 

# ), and particulate

matter (PM) emissions on every coal-fir ed unit it operates, to retire SO 2 

# and NO

x 

# allowances,

and to undertake environmental projects.

In late 2005, USEPA learned that PSEG Fossil woul d not be able to comply with the December

31, 2006 deadlines in the 2002 Consent Decree to inst all a flue gas desulfurization (FGD) device

(also known as a “scrubber”) to control SO 2 

# and a baghouse to control PM on its highest

polluting power plant, Hudson Unit 2. USEPA also learned that PSEG Fossil would not comply

with a May 1, 2007 deadline to inst all a selective catal ytic reduction device (“SCR”) to control

NO

x 

# at Hudson Unit 2.

Subsequently, USEPA, New Jers ey, and PSEG Fossil began negotiating an amendment to the

2002 Consent Decree. The Amendment imposes $6.0 million in civil penalties for PSEG

Fossil’s anticipated failure to comply with the 2002 Consent Decree, provides a new timeline to

PSEG Fossil to install controls, imposes inte rim emission reduction measures and requires

additional pollution reductions to ensure that the environment will be made whole despite PSEG

Fossil’s prospective violations of the 2002 C onsent Decree. In addition, PSEG Fossil will

implement a host of diesel engine retrofit/repl acement projects for the State of New Jersey

valued at $3.25 million. With these new requirements, the Amendment is “environmentally

neutral” to the 2002 Consent D ecree, and achieves permanent reductions beyond that required

for in the 2002 Consent Decree.

State Partnerships: The State of New Jersey, as a pa rty to the 2002 Consent Decree and coplaintiff in the original lawsuit, was instru mental in negotiating this Amendment. This

Amendment is another excellent example of how the state and federal government can work

together to protect the envir onment and public health.

Affected Power Plants: The Amendment requires pollution reductions and imposes new

deadlines on power plants in cluded in the 2002 Consent D ecree, including Hudson Unit 2,

Mercer Unit 1 and Mercer Unit 2. In additi on, the Amendment requires the shutdown of two

uncontrolled oil-fired units, Kearny Units 7 and 8.

1

# Environmental Neutrality: The proposed changes to the 20 02 Consent Decree will be at a

minimum “environmentally neutral.” This means th at an Amendment has to achieve the same or

greater emission benefits as the original 2002 Consent Decree and such emission reductions must

take into consideration when they are achieved. This is known as “ quantitative and temporal

neutrality ,” respectively.

In addition to installing the required contro ls at Hudson by the extended duedates, the

Amendment achieves quantitative neutrality for SO 2 

# , NO

x, 

# and PM by requiring PSEG Fossil

to:

• Achieve an emission rate on its SCRs at Me rcer Units 1 and 2 of 0.100 lbs./mmBtu on a

90 day rolling average, by January 1, 2007;

• Advance installation and operation of an F GD on Mercer Unit 2 from 2012 to 2010;

• Operate two new baghouses to control PM and mercur y emissions from Mercer Units 1

and 2 by December 31, 2008;

• Limit fuel to 100% ultra low-sulfur coal by May 1, 2007, comply with an SO 2 

# emission

rate, and meet annual tonnage caps for SO 2 

# and NO

x 

# at Hudson Unit 2 until PSEG installs

an FGD or shuts down the unit;

• Install carbon injection systems to make best efforts to achieve a 90% reduction in

mercury emissions at Hudson Unit 2, Mercer Unit 1 and Mercer Unit 2;

• Shut down Kearny Units 7 and 8 (two uncont rolled oil-fired units), and surrender any

SO 2 

# allowances allocated to those units in excess of the operational needs for PSEG

Fossil’s compliance with the amendmen t and the 2002 Consent Decree.;

• Install PM and Mercury Continuous Emi ssion Monitoring Systems (CEMS).

Table 1, below, identifies the specific change s to the 2002 Consent Decree effected by the

Amendment as it relates to Hudson Unit 2, Mercer Unit 1 and Mercer Unit 2.

In addition to considering the quantity that must be reduced to achieve neutrality with the 2002

Consent Decree, the Amendment also takes into consideration PSEG Fossil’s delay in failing to

timely install and operate pollution controls. In short, a ton of air po llution reduced today is

more valuable to public health th an a ton of air pollution reduced at some later date. To achieve

this “temporal neutrality,” USEPA and New Jersey discounte d the emission reductions that

were later in time than those reductions under the 2002 Consent Decree. To the extent that the

discounted emission reductions fell short of the emission reductions under the 2002 Consent

Decree, the Amendment requires PSEG Fossil to surrender three times that amount in

allowances. For example, the Amendment require s that, to achieve temporal neutrality for NO

x 

# , an additional 410 tons of NOx be eliminated th rough the purchase and surrender of that quantity

of NO

x 

# allowances (1 allowance equals 1 ton of em issions). This amendment also requires

PSEG Fossil to surrender an additional 820 NO

x 

# allowances, as a “premium”over and above the

amount of allowances necessary to achieve temporal neutrality. In total, 1,230 NO

x 

# allowances

will be surrendered.

For SO 2 

# , PSEG was able to demonstrate temporal neutrality. However, for PM, there is a

temporal shortfall of 2,856 tons. Since there is no applicable PM allowance program, PSEG

2

# 3 Fossil will be required to surrender 2,856 SO 2 

# allowances to address this temporal shortfall.

Similarly, the amendment re quires a premium of 5,712 SO 2 

# allowances over and above the

amount of allowances necessary to achieve temporal neutrality. In total, PSEG must surrender

a total of 8,568 SO 2 

# allowances, or three times the 2,856 SO 2 

# allowances needed to achieve

temporal neutrality for PM.

Option to Shutdown Hudson Unit 2: PSEG Fossil is considering whether or not to shut down

Hudson Unit 2 by December 31, 2008. If its deci sion is to shut down, PSEG Fossil may be

ordered by the Department of Energy to opera te Hudson Unit 2 to address energy reliability

concerns, notwithstanding PSEG Fo ssil’s plans to shut it down. To address this situation, the

Amendment requires that even in the face of su ch an order, PSEG Fossil shall not operate

Hudson Unit 2 beyond December 31, 2010 unless it has installed the controls and complied with

emission rates and pollution reduction measures in the Amendment.

Planned Shutdown of Kear ny Units 7 and 8: The Amendment requires the permanent

shutdown of Kearny Units 7 and 8, two uncontrolled oil fired units in the PSEG Fossil system.

The Amendment also requires th e surrender of any pollution cont rol permits issued for those

units, as well as any excess SO 2 

# or NO

x 

# allowances allocated to thos e units that are not otherwise

needed for PSEG Fossil’s compliance in a give n year with the Amen dment and 2002 Consent

Decree.

Civil Penalty and Environm ental Mitigation Projects: PSEG Fossil is required to pay a total

civil penalty of $6.0 million to the United States and the State of New Jersey for prospective

violations of the 2002 Consent Decree. The United States will collect $4.25 million in civil

penalties. New Jersey will collect $1.75 million in civil penalties and will require PSEG Fossil

to perform environmental projects valued at $3.25 million focused on reducing particulate matter

from diesel engines in New Jersey.Table 1. Summary Comparison of Pollution Controls/OperatingParameters and Emission Limitations in the Amendment vs.2002 Consent Decree.Hudson Unit 2Mercer Unit 1Mercer Unit 22002ConsentDecreeAmendment2002 ConsentDecreeAmendment2002 Consent DecreeAmendmentSO2ControlsFGDInterim: use of ultra lowsulfur coal until FGDFGDNo changeFGDNo changeSO2ControlInstallation Date12/31/0612/31/201012/31/2010No change12/31/201212/31/2010SO2Emission Rate0.15 lbs/ mmBTU on30-day avg; 0.25lbs/mmBTU on 24-hravg.Interim: Overall annualSO2emissions cap andan SO2emissions rate(30 day average) basedon the use of ultra lowsulfur coal until theFGD is installed.Final: 0.150lbs/mmBTU on 30-dayaverage; 0.250lbs/mmBTU on 24-houraverage0.15 lbs/ mmBTU on30-day avg; 0.25lbs/mmBTU on 24-hravg.Final: 0.150lbs/mmBTU on 30-dayaverage; 0.250lbs/mmBTU on 24-houraverage0.15 lbs/ mmBTU on30-day avg; 0.25lbs/mmBTU on 24-hravg.Final: 0.150lbs/mmBTU on 30-dayaverage; 0.250lbs/mmBTU on 24-houraverageNOxControlsSCRInterim: use of ultra lowsulfur coal and SNCRyear roundSCRNo changeSCRNo changeNOxControlInstallation Date5/1/07SNCR operation by1/1/2007; SCRinstallation andoperation by12/31/20105/1/05No change5/1/04No change4Hudson Unit 2Mercer Unit 1Mercer Unit 22002ConsentDecreeAmendment2002 ConsentDecreeAmendment2002 Consent DecreeAmendmentNOxEmission Rate0.10 lbs/ mmBTU on30-day avg; 0.15lbs/mmBTU on 24-hravg.Interim: Overall interimannual NOx emissionscap and an NOxemission rate (30 dayaverage) based uponthe use of ultra lowsulfur coal until SCR isinstalled.Final: SCR NOx rate of0.100 lbs/ mmBTU on30-day avg; 0.150lbs/mmBTU on 24-hravg.0.13 lbs/ mmBTU on30-day avg; 0.15lbs/mmBTU on 24-hravg.In addition to existingNOx emission rates,0.100 lbs./mmBtu on90-day avg. by 1/1/20070.13 lbs/ mmBTU on30-day avg; 0.15lbs/mmBTU on 24-hravg.In addition to existingNOx emission rates,0.100 lbs./mmBtu on90-day avg. by 1/1/2007PM ControlsOptimize ESP andinstall polishingbaghouseInstall Full sizebaghouse to replaceESPOptimize and/orupgrade existing ESPInstall new baghouse toreplace ESPOptimize and/orupgrade existing ESPInstall new baghouse toreplace ESPPM ControlInstallation DateOptimization by12/31/02; Baghouseby 12/31/06Operate existing ESPand fly ash conditionerby 1/7/2006; Install andoperate baghouse by12/31/201012/31/02 (est.)12/31/200812/31/02(est.)12/31/2008PM Emission Rate0.015 lbs/mmBTU0.0150 lbs/mmBTU0.03 lbs/mmBTU0.0150 lbs/mmBTU0.03 lbs/mmBTU0.0150 lbs/mmBTUContinuousEmissionMonitoring Systems(CEMS)MercuryorPMCEMSMercuryandPMCEMSMercuryorPMCEMSMercuryandPMCEMSMercuryorPM CEMSMercuryandPMCEMSMercer ControlsNoneCarbon Injection byDec 31, 2010NoneCarbon Injection by Jan1, 2007NoneCarbon Injection by Jan1, 20075