(Reuters) - U.S. power company Duke Energy Corp agreed to a $2.5 million settlement proposed by the Virginia Department of Environmental Quality relating to the 2014 coal ash spill into the Dan River in North Carolina, the DEQ said on Friday.
Duke, the largest in the United States by power generation capacity, will spend $2.25 million in carrying out environmental projects to benefit Virginia localities affected by the spill.
The remaining $250,000 will be placed in a DEQ fund to respond to environmental emergencies.
A pipe break at a retired Duke coal plant in February 2014 triggered the third-worst coal ash spill in U.S. history. The event prompted North Carolina's Senate to ask Duke to close 33 coal ash ponds in the state within 15 years.
The accident occurred amid a long-running legal battle over the storage of coal ash waste at Duke facilities.
The company said it had set aside $100 million in the fourth quarter in anticipation of the settlement.
A public comment period on the proposed order will be open through May 20, 2015. Afterward, the State Water Control Board must give final approval for the order to take effect, DEQ said. Duke, which sells power to 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, also operates in Argentina, Chile and Brazil.
Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Dan Grebler