January 25, 2010 / 4:46 PM / 9 years ago

UPDATE 1-Westar to spend $500 mln at plant to cut pollution

* Westar to pay $3 mln civil penalty

* To spend $500 mln to cut air pollution (Adds company, EPA comment, details of mitigation, shares)

WASHINGTON, Jan 25 (Reuters) - Westar Energy Inc WR.N will spend about $500 million to cut air pollution from a Kansas coal-fired electric generating plant as part of a settlement over Clean Air Act violations, U.S. agencies said on Monday.

The company agreed to install pollution control equipment at its Jeffrey Energy Center, which is aimed at reducing sulfur dioxide and nitrogen oxide emissions by approximately 78,600 tons annually, the Justice Department and Environmental Protection Agency said in a statement.

The pollutants can cause severe lung damage that can lead to premature death and they are considered to be big contributors to acid rain and smog, the federal agencies said.

Westar had already announced it would pay a $3 million civil penalty and $6 million on environmental mitigation projects as part of the settlement agreement reached with the federal agencies and the state of Kansas.

“Today’s settlement sets the most stringent limit for sulfur dioxide emissions ever imposed on a coal-fired power plant in a federal settlement,” Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, said in a statement.

The company also agreed to surrender surplus sulfur dioxide allowances, the Justice Department and EPA said.

As part of the settlement, Westar said it would install a selective catalytic reduction system at one of its three coal units at the Kansas plant by the end of 2014.

A second system may have to be installed on a second unit by the end of 2016, depending on how much pollution is controlled by the first one and other pollution control equipment installed, the company said in a statement.

“The settlement calls for environmental investments and mitigation we would have eventually done anyway, and puts our dollars to work for the environment rather than being spent on expensive litigation,” Bill Moore, Westar president and chief executive, said in a statement.

Westar shares rose 11 cents to $21.67 in midday trading on the New York Stock Exchange. (Reporting by Jeremy Pelofsky, editing by Gerald E. McCormick and Maureen Bavdek)

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