The City of Alexandria, Va., and Houston-based GenOn on Monday agreed to shutter the company’s 482-MW coal-fired Potomac Generating Station (PRGS) by Oct. 2012. Community groups had fiercely opposed the 1949-built plant’s continued operation, citing concerns about its age and emitted pollution, but the plant has been seen as a key facility that maintains reliability for Washington, D.C.

The agreement to close the plant follows a 2008 settlement between GenOn (then Mirant Corp.) and the city in 2008, in which the company agreed to install emissions control equipment and deposit $34 million into an interest-bearing escrow account to implement pollution control technology and reduce stack and fugitive particulate matter emissions from the facility. Saying that it desires GenOn to “cease operation of and retire” the facility, the city agreed to release about $32 million of the funds held so far in escrow if GenOn closes down the plant by Oct. 1, 2012.

In a signed agreement, the parties agreed that if the plant is required to stay open past that date to ensure reliability, the closure could be postponed, but if the plant remains open past January 2014, GenOn must pay the city $750,000.

The plant has suffered several legal setbacks, most stemming from environmental violations. In 2005, Virginia environmental officials cited the plant as having violated various air pollutant standards and ordered its owners to upgrade the plant or shut it down. A decision to shut down the plant was thwarted, however, by the Department of Energy, which said that the plant operations were required to maintain reliability in D.C. The Federal Energy Regulatory Commission subsequently directed the local District of Columbia utility, the Potomac Electric Power Co. (PEPCO) and grid operator PJM Interconnection to submit a plan for preserving reliability in the area without relying on the facility.

The group recommended investment in various transmission upgrades, most which have been completed and have gone into commercial operation.

“Retiring the facility next year makes sense for GenOn, but it is a difficult decision given the impact on the approximate 120 employees who work at the station,” said Edward R. Muller, chairman and CEO of GenOn. “Our decision to retire the plant is not reflective of our employees’ skills, dedication or capabilities, and we will work to help them in their transition over the next year.”

Sources: POWERnews, City of Alexandria