Danny Johnston, File, Associated Press
FILE - In this file photo taken Feb. 14, 2011, construction progresses on the John W. Turk, Jr., power plant near Fulton, Ark. Environmental groups and an electric utility agreed Thursday, Dec. 22, 2011 to settle their litigation over the $2.1 billion coal-fired electric generation plant still under construction.

LITTLE ROCK, Ark. — An electric utility can finish building a $2.1 billion coal-fired power plant in southwest Arkansas after announcing a settlement Thursday with environmental groups that have long opposed the plant.

The Audubon Society and Sierra Club said Southwestern Electric Power Co. agreed to mothball an older coal plant unit in northeast Texas to help offset pollution generated by the new plant in Fulton, Ark.

The 600-megawatt Arkansas plant, which would generate enough power for about 450,000 homes, has long been a point of contention with environmental groups and neighbors who feared the plant would spew pollutants that cause acid rain and threaten some of the region's pristine cypress trees and wildlife.

But the settlement announced Thursday clears the last legal roadblocks left to moving forward with the plant.

"It's a clear path to completion," said Venita McCellon-Allen, SWEPCO's president and chief operating officer. "And we're very excited about that."

The John W. Turk Jr. Power Plant, which has been under construction since 2008, is more than 80 percent complete, the utility said. It's scheduled to begin commercial operation in late 2012.

SWEPCO said that once the Turk plant is up and running, a 528-megawatt unit near Pittsburg, Texas, will be limited to no more than 60 percent of its annual capacity. The utility will retire that plant no later than the end of 2016.

The utility will reimburse the environmental groups for $2 million in legal costs and chip in $10 million to other groups for energy-efficiency advocacy and land conservation efforts.

SWEPCO spokesman Peter Main said the utility reached out to the groups after it reached another settlement this summer.

"While we'd prefer that the Turk plant not be built, (Thursday's) settlement brings some very good news for Arkansas, which would not have been possible without years of citizen opposition to dirty coal plants," Glen Hooks, with Sierra Club, said in a statement.

Proponents of the power plant, which rises out of an old pine tree farm about 125 miles southwest of Little Rock and not far from a lake where bald eagles nest, estimate a marble-sized amount of mercury will affect local communities over the plant's lifetime.

The Sierra Club said the plant is permitted to emit 89 pounds of mercury per year, though that figure may shrink under a new Environmental Protection Agency rule that forces plants to control mercury and other toxic pollutants.

In contrast, Texas' Welsh Unit (hash)2, which will be shut down as part of the settlement, emitted about 150 pounds of mercury last year, the Sierra Club said.

The settlement agreement, which was filed in federal court Thursday, withdraws all legal challenges to permits and certificates required to build and run the Turk plant, SWEPCO said. A preliminary injunction will be lifted, too, allowing workers to finish construction on part of the plant's water system.

Like one reached with a group of hunters this summer, the settlement says SWEPCO won't build any more generation units at the Turk site. The utility also said it won't build any more coal-fired plants within 30 miles of the site in Arkansas.

SWEPCO, which owns 73 percent of the plant, is a unit of Columbus, Ohio-based American Electric Power, one of the largest electric utilities in the nation. SWEPCO serves more than 500,000 customers in Arkansas, Louisiana and Texas. AEP delivers electricity to more than 5 million customers in 11 states.

Associated Press writer Chuck Bartels contributed to this report.

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