UPDATE 1-AEP to stop burning coal at 3 U.S. Midwest power units

Feb 25 (Reuters) - U.S. power company American Electric Power Co Inc will stop burning coal at three Midwest power plants by 2015 as part of a settlement announced with federal regulators, eight states and several environmental groups.

In a statement on Monday, the environmental groups said the Ohio-based company, long known as the biggest coal generator in the country, would retire a total of 2,011 megawatts (MW) of coal-fired capacity at plants in Indiana, Ohio and Kentucky.

The environmental groups, including the Sierra Club and Natural Resources Defense Council, said AEP would stop burning coal at the 580-MW Tanners Creek 4 unit in Indiana, the 615-MW Muskingum River 5 unit in Ohio and the 816-MW Big Sandy 2 unit in Kentucky.

AEP said in a statement that it agreed to install pollution control equipment on the two 1,300-MW coal-fired units at Rockport, another power plant in Indiana, as well as refueling or retiring the Tanners Creek 4 unit.

In the past, AEP said it was thinking about retiring Big Sandy 2 by 2015, refueling Muskingum River 5 with natural gas by 2017 and refueling Tanners Creek 4 at some point.