NRG Energy, which has headquarters in New Jersey, said it would close two coal-fired units at the Portland Generating Station in Mount Bethel, Pa., by June 2014.
NRG acquired the facility when it merged with GenOn Energy, which has headquarters in Houston, in December.
NRG Regional President Lee Davis said plans were launched to allay New Jersey and Connecticut concerns about air quality. State authorities filed a lawsuit for alleged violations of the Clean Air Act at the Pennsylvania facility, situated near their state borders. GenOn had agreed to shutter the 570-megawatt facility by January 2015.
"As a part of the settlement, we committed to make a significant investment in projects that are beneficial to the environment consistent with NRG's focus on providing power in a way that is environmentally responsible, reliable and affordable," Davis said in a statement.
NRG denied there were violations at the Mount Bethel plant but said settlement action was in the public interest and the best way to resolve the dispute.
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