CHICAGO -- The Ohio Air Quality Development Authority unanimously passed a resolution Tuesday that gives preliminary approval for issuing up to $835 million of tax-exempt and taxable bonds to finance air pollution control equipment at an investor-owned power plant.

Mark Shanahan, the authority's executive director, said the resolution on behalf of American Electric Power, the owner of the plant, is an agreement to issue the bonds if the utility decides to install pollution scrubber equipment at its Gavin plant.

While a decision by the utility is not expected until the spring, Mr. Shanahan said if the decision is made to install the equipment, the sevem-member board would have to review the utility's plans at that time before the bonds could be issued.

Meanwhile, the utility is in the process of applying for an allocation under the state's private-activity volume cap for the tax-exempt portion of the bonds, Mr. Shanahan said. A spokesman for the utility has said about $200 million of the bonds could be tax-exempt. The state's cap for the current year is about $550 million.

While the Tax Reform Act of 1986 ended the use of tax-exempt bonds for air pollution control equipment, tax-exempt financing is still allowed for the solid-waste component of scrubbers.

A spokesman for American Electric Power has said bond financing was being pursued to keep open the option for installing a scrubber and that the utility would be solely responsible for principal and interest payments on any revenue bonds that would be issued.

The utility is weighing the option to install a scrubber in connection with the acid rain provisions of the federal Clean Air Act Amendments of 1990, which call for power plants to reduce their emissions of sulphur dioxide by half during the decade. Instead of installing the scrubber, the utility could switch to low-sulphur, out-of-state coal.

In July, Gov. George Voinovich signed into law a bill that offered incentives to power plants that use the high-sulphur coal mined in the state and formalized the process of issuing bonds to finance scrubbers through the Air Quality Development Authority.

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