Public Service Company of Oklahoma (PSO), a unit of American Electric Power (NYSE: AEP), has entered into an agreement in principle with the U.S. Environmental Protection Agency, the State of Oklahoma and the Sierra Club that establishes a framework for PSO to comply with EPA regulations affecting PSO’s two coal-fired generating units at its Northeastern Station in Oologah, Oklahoma.

Specifically, the agreement addresses PSO’s future obligations under the EPA’s Regional Haze rule (RHR) and EPA’s Mercury and Air Toxics Standard (MATS). Under the agreement, PSO would meet specified emissions rates at both Northeastern coal units, install certain emissions control equipment on one of the Northeastern coal units in 2015, and retire the other unit in 2016. The coal unit with the emissions controls would be retired in the 2025-26 timeframe.

The agreement also will result in PSO withdrawing its lawsuit against the EPA regarding the Regional Haze rule.

"This landmark agreement outlines a clear and cost-effective path for compliance by PSO’s Oklahoma coal-fired generating units with the EPA’s new rules," said Stuart Solomon, PSO’s president and chief operating officer. "It allows PSO to implement a compliance plan that resolves the Company’s most significant environmental issues, provides a manageable transition for our generation fleet, and assures continued reliability for our customers."

The agreement is the result of extensive negotiations concerning compliance with the EPA’s MATS rule and its "Federal Implementation Plan" for the RHR, both issued in December 2011.

"There are many people I’d like to thank for their essential role in reaching this agreement, including Governor Mary Fallin, Attorney General Scott Pruitt, Oklahoma Secretary of Environment Gary Sherrer, Secretary of Energy Mike Ming, Oklahoma Department of Environmental Quality director Steve Thompson, the EPA and the Sierra Club," said Solomon. "All provided great leadership in taking a positive and cooperative approach to improving Oklahoma’s environment and also providing a sensible approach to environmental compliance for PSO and our customers."

The parties to the agreement will work together to develop definitive settlement documents in the next 30-60 days. The settlement will then be subject to public review and comment.

PSO will file with the Oklahoma Corporation Commission (OCC) an environmental compliance plan that reflects the agreement. The OCC must approve costs associated with the plan before PSO can recover those costs from customers.

PSO, a unit of American Electric Power (NYSE: AEP), is an electric utility company serving more than 532,000 customers in eastern and southwestern Oklahoma. With headquarters in Tulsa, PSO has 4,308 megawatts of generating capacity and provides electricity to 230 cities and towns across a service area encompassing 30,000 square miles. News releases and other information about PSO can be found on the World Wide Web at www.PSOklahoma.com.