HOUSTON (Reuters) - Luminant, the largest electric generating company in Texas, said on Tuesday it has reached an agreement with environmental groups to avoid a lawsuit aimed at stopping construction of a new coal-fired power plant.
Under the agreement with the Sierra Club and Public Citizen, Luminant agreed to further restrict emissions of mercury and other pollutants at the 1,600-megawatt Oak Grove power plant now under construction in Robertson County.
"This agreement gives us greater legal and regulatory certainty as we complete the Oak Grove generating station," Bill Moore, general counsel of Dallas-based Luminant, said in a release.
Oak Grove was one of eight coal-fired power plants in six states that Sierra Club warned it might sue back in May because the group said the projects violated the Clean Air Act.
The threatened suits followed a February ruling by a federal appeals court that said the U.S. Environmental Protection Agency violated the Clean Air Act in not setting mandatory cuts for mercury emissions of power plants.
Coal-fired power plants are the largest source of mercury emissions in the United States as well as 40 percent of carbon dioxide emissions. CO2 is blamed for global warming.
While coal is used to generate about half the electricity consumed in the country, environmental groups are pushing utilities to invest in cleaner power sources like solar and wind and more energy-efficiency programs.
Luminant agreed to seek a new regulatory determination that the Oak Grove units will use "maximum achievable control technology," or MACT, to control certain emissions, including mercury, it said in a release.
The agreement does not spell out final emission limits for Oak Grove, but does require Luminant to "comply with the law," said Sanjay Narayan, a Sierra Club attorney.
Sierra Club can participate in the regulatory review at the Texas Commission on Environmental Quality.
As part of an effort to gain approval to buy Luminant's parent, TXU Corp, in 2007, an investment group agreed to scale back TXU's plan to build 11 coal-fired units to three, including Oak Grove.
TXU's new owner, Energy Future Holdings Corp, also agreed to invest $1 billion to increase emission controls at Luminant's new coal plants and at 5,800 MW of existing coal generation.
In August, Sierra Club filed a suit to stop Houston-based Dynegy Inc and LS Power Group, from building the 900-MW Sandy Creek coal plant in McLennan County, Texas.
The Texas grid agency is counting on new coal plants coming online in the next two summers to bolster generation and avoid possible blackouts.
Oak Grove's first unit is expected to be online in late 2009. Luminant owns and operates more than 18,000 MW of generating capacity in Texas.
(Reporting by Eileen O'Grady; editing by Richard Chang)
