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Breaking News: BPU Could Face Thousands in Fines
A confidential report reveals the utility didn't follow federal pollution regulations when upgrading its plants.
Justin Kendall
Published: March 1, 2007
The Board of Public Utilities in Kansas City, Kansas, may be liable for thousands of dollars in fines for failing to comply with anti-pollution regulations, according to a confidential document obtained by the Pitch.

Subject(s): Mary Gonzales, EPA, Board of Public Utilities, Susan Allen, Marc Conklin
The document was prepared November 16, 2004, by lawyer Stanley A. Reigel. It weighs the pros and cons of admitting to the Environmental Protection Agency that upgrades at BPU power plants did not comply with the federal Clean Air Act.

The report was hand-delivered to Marc Conklin, BPU general counsel and human resources director. The report is stamped “CONFIDENTIAL” and warns against duplication without Conklin’s approval. Conklin did not return a call from the Pitch.

BPU spokeswoman Susan Allen also declined to comment and instead sent an e-mail that read: “BPU cannot comment on a BPU confidential report. The Pitch should be aware that it possesses a confidential, legally protected document. The document should be returned to BPU.”

Mary Gonzales, president of the board of directors that oversees the utility, said Thursday that she was unaware of the report. Reigel did not immediately return a phone call on Friday to his office at the law firm of Stinson Morrison Hecker in Kansas City, Missouri.

When Reigel’s report was written, the EPA was auditing utility companies to see whether upgrades and repairs made after 1980 at coal-powered power plants followed federal guidelines. The letter indicates that the BPU was preparing to respond if audited by the EPA. However, it’s unclear what action, if any, the BPU took after Reigel delivered his letter.

Kim Olson, an EPA spokeswoman in Kansas City, tells the Pitch that the BPU has not contacted the agency to disclose its failure to seek repair permits and follow regulations when making upgrades.

According to Reigel’s letter, his report was spurred by a November 14, 2003, analysis of BPU’s coal-fired power plants by Burns & McDonnell Engineers. The engineering firm estimated that upgrades to the plants to make them comply with federal regulations would cost the utility nearly $160 million.

Reigel’s 15-page document identifies 73 repairs or upgrades that may not have followed EPA rules. The work was done at the utility’s three power plants: Nearman Creek Power Station, Quindaro Power Station and the now-closed Kaw Power Station. The work was completed between January 1980 and November 2004. Reigel determined that 15 of those repairs and upgrades were “questionable” and another 15 projects would be “probably not defensible” if the EPA conducted an audit.

Any one of those projects “puts BPU at risk” for an audit by the EPA, Reigel warned. Fines for utility companies in similar cases amounted to $1,000 for each megawatt of energy produced by the plant. Together, the Nearman and Quindaro plants produce 631 megawatts.

The audits Reigel refers to in his letter fall under an EPA initiative called New Source Review. The program was established by Congress in 1977 as part of the Clean Air act. It requires permits before construction on new power plants. It also calls for modifications at plants to be “as clean as possible,” according to the EPA’s Web site.

Reigel’s report indicates that the BPU did not get the permits “for any of the projects.”

“Thus, failure to conduct pre-project NSR and failure to monitor post-project emission constitutes a violation itself, unless the project is exempt, even if the project does not increase actual emissions above the allowable increment,” the report says.

h/t Josh