The Potomac River Generating Station, the Alexandria coal-burning plant that has been the target of fines and redevelopment efforts, will permanently close next year.
The City of Alexandria and GenOn Energy reached an agreement to retire the 60-year-old facility by October of 2012.
"This news strengthens Alexandria's future and opens the door to an enhanced quality of life for our residents," Alexandria Mayor William Euille said in a statement.
To facilitate the closure, the city will release about $32 million which was set aside to pay for environmental controls at the plant.
Officials say that the closing date may be extended for reliability purposes, but will be taken offline as soon as it's no longer needed.
The jobs of 120 workers at the plant are now up in the air.
"Our decision to retire the plant is not reflective of our employees' skills, dedication or capabilities, and we will work to help them in their transition over the next year," GenOn Chairman and CEO Edward Muller says.
As recently as early August, GenOn said that there were no plans to shutter the generating station.
Potomac River has been repeatedly fined over environmental concerns, including $275,000 in penalties in 2011 alone.
Rep. Jim Moran (D-Va.) called the closure a "long fought but well-won victory" in a statement.
"What once was the largest stationary source of air pollution will be no more," Moran said.
Supporters of a clean-air alternative have proposed replacing the site with a natural gas fueling station, townhomes and shops.