The company recently agreed to sell two of the coal plants, and it shut the third one down last year.
"We have operated these stations in full compliance with the Clean Air Act, and we deny the allegations," company spokesman Dan Genest said. "We are justifiably proud of our environmental record, which includes spending more than $3 billion for environmental controls across our fleet since 2000."
Dominion agreed to the settlement with the U.S. Justice Department and the Environmental Protection Agency, announced Monday, rather than engage in a drawn-out and expensive legal fight, Genest said.
The company's shareholders will bear the cost of the settlement, Genest said. Because the three plants are located out of state and are not part of Dominion Virginia Power's generating stations, "it will have no impact on Virginia customer bills."
The EPA said the settlement will result in reductions of nitrogen oxides, sulfur dioxide, and particulate matter by more than 70,000 tons per year from the three coal-fired power plants, located in Kincaid, Ill., Somerset, Mass. and State Line, Ind.
"This settlement will improve air quality in states in the Midwest and Northeast by eliminating tens of thousands of tons of harmful air pollution each year," said Ignacia S. Moreno, assistant attorney general for the Justice Department's Environment and Natural Resources Division. "These reductions mark the latest step in our continuing efforts, along with EPA, to protect public health and the environment through rigorous enforcement of the Clean Air Act."
Dominion Resources announced last month that it had agreed to sell the Brayton Point Power Station, a 1,528 MW power plant in Somerset, Mass., and the Kincaid Power Station, a 1,158 MW power plant in Kincaid, Ill.
The company has owned Brayton Point since 2005 and Kincaid since 1998. The sale of the two power plants is expected to close in the second quarter of this year.
Since 2000, Dominion said it spent more than $1 billion at Brayton Point and Kincaid to comply with federal and state environmental regulations.
Energy Capital Partners, the prospective owner of Brayton Point and Kincaid, will assume responsibility for installing the remaining required pollution controls and for meeting the emissions requirements after the close of the sale, according to Dominion Resources.
The company shut down the aging State Line plant in Hammond, Ind., in March 2012 and sold it in June 2012 to BTU Solutions of Houston.
Under the consent decree, Dominion Resources agreed to pay a $3.4 million civil penalty and spend $9.8 million on environmental mitigation projects.
For the mitigation work, of $9 million will be spent on projects such as: woodstove replacements in Massachusetts, Rhode Island and Connecticut; locomotive engine idling reduction for Chicago rail yards; land acquisition and restoration near the Indiana Dunes National Lakeshore; energy efficiency, and geothermal and solar projects for local schools and food banks; and clean diesel engine retrofits for municipalities and school districts.
Dominion Resources also will pay $750,000 to the U.S. Forest Service and the National Park Service for projects to address damage done by the plants' alleged excess emissions.