American Electric Power (NYSE: AEP) will stop burning coal at three power plants in the Midwest and pay $8.5 million as part of a revision of a 2007 settlement with the U.S. Environmental Protection agency, states and environmental groups.

AEP will stop burning coal at the Tanners Creek Generating Station Unit 4 in Indiana, the Muskingum River power plant Unit 5 in Ohio, and the Big Sandy power plant Unit 2 in Kentucky by 2015, according to the agreement made public Feb. 25. The company made the revised agreement because it wanted to use a less expensive technology to reduce emissions at the Rockport power plant in southern Indiana in exchange for other concessions.

The closing of the plants means AEP will retire around 2,000 MW of total coal-fired power capacity. The company had previously stated it intended to close the coal-fired units or convert them to other fuels.

AEP is also agreeing to develop 50 MW of solar power in 2013 as well as 150 MW of wind or solar power in Indiana or Michigan by 2015.

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