Cherokee Unit 2 shut as PSCo continues to phase out coal capacity

Cherokee Unit 2 was removed from service as a coal generating station on Oct. 15, 2011, and other coal units are on their way out the door under a prior order from the Colorado Public Utilities Commission, said Public Service Co. of Colorado representative Karen Hyde.

On Nov. 22, PSCo filed with the commission for a rate hike, with the Hyde testimony part of that filing. Hyde outlined the status of a series of commission-ordered coal shutdowns and conversions and how some of those projects should be treated for rate-making purposes. Hyde is employed by Xcel Services as Vice President, Rates and Regulatory Affairs. Xcel Services is a wholly owned subsidiary of Xcel Energy (NYSE:XEL), the parent of PSCo.

The company assumes that Arapahoe Unit 3 will be retired at the end of 2013 along with a portion of Arapahoe Unit  4 and that the remainder of Arapahoe Unit 4 will be retired at the end of 2023, Hyde said. PSCo assumes that Zuni Unit 1 was retired at the end of 2009 and that Zuni 2 will run through the end of 2014. It assumes for accounting purposes that the coal-fired Cameo units 1-2 were retired at the end of 2010. The Cameo units are currently being dismantled.

In its 2007 electric resource plan (ERP), the company proposed early retirement of Arapahoe units 3-4 for air quality purposes. In 2010, the commission again addressed the retirement date of Arapahoe 3-4 as part of an emissions reduction plan. In that docket, the commission approved the conversion of Arapahoe 3 to a synchronous condenser at the end of 2013 and permanent fuel switching of Arapahoe 4 at the end of 2013 with an estimated operation of 10 years on natural gas. In the rate case filed Nov. 22, PSCo uses retirement dates consistent with that decision. The company has left open the possibility of retirement of Arapahoe 4 between 2013 and 2023 in the 2011 ERP.

In a previous decision, the commission ordered an emissions reduction plan in this chronological order: retire Cherokee 2 by the end of 2011 and convert it to a synchronous condenser; retire Cherokee 1 by July 1, 2012, after Cherokee 2 is on line as a synchronous condenser; retire Arapahoe 3 by the end of 2013 and convert it to a synchronous condenser; permanently fuel switch Arapahoe 4 to burn natural gas by the end of 2013; install emissions controls (sorbent injection, selective catalytic reduction, and a lime spray dryer) on Pawnee by the end of 2014; install emissions controls (SCR) on Hayden 1 by the end of 2015; construct a new 2 X 1 combined cycle gas-fired facility at the Cherokee plant; retire Cherokee 3 by the end of 2016 or earlier if the new combined-cycle facility is operating reliably; install emissions controls (SCR) on Hayden 2 by the end of 2015; retire Valmont 5 by the end of 2017; and permanently fuel switch Cherokee 4 to burn natural gas by the end of 2013.

As for the current state of execution of that order, Hyde said Cherokee 2 was removed from service as a coal generating station on October 15, 2011. A commission administrative law judge recommended approval of the Certificate of Public Convenience and Necessity (CPCN) to retire and demolish Cherokee 1 and 2. The commission deliberated on the matter on Nov. 17, 2011, and verbally affirmed the ALJ’s decision in a 2:1 vote.

In another docket at the commission, PSCo determined that it does not need to convert Arapahoe 3 to a synchronous condenser to maintain transmission system reliability. In a settlement in that docket, the company clarified that it did not ask for a commission decision in this matter and agreed to perform additional studies to be filed at the end of 2012.

PSCo applied with the commission for the emissions controls on Pawnee, with hearings held in that docket but no decision by the ALJ issued.

The company filed a CPCN application for the new 2 X 1 combined cycle gas-fired facility at Cherokee, with hearings in that docket scheduled for December 2011.

PSCo also filed a CPCN for the emissions controls on Hayden’s two coal units on Nov. 14, 2011.

Included in the rate request filed Nov. 22 are the costs to retire and decommission Cherokee 1 and 2, costs to convert Cherokee 2 to a synchronous condenser, costs associated with the new 2 X 1 combined cycle, and costs of the emissions controls on Pawnee 1. The estimated decommissioning cost for the two Cherokee units is $23 million.

The costs of the SCR emission controls at Hayden 1 and 2 are not in this rate request because the cash flow for the construction of the emissions controls will be minimal in 2012 and the costs can be handled within the company’s next rate case.

“In Docket No. 10M-245E, the Commission approved retirement of Cherokee 1 in 2012, Cherokee 2 in 2011, and Cherokee 3 in 2015/2016,“ Hyde noted. “In that same docket, the Commission approved closure of Arapahoe 3 in 2013 and permanent fuel conversion of Arapahoe 4 and Cherokee 4 from coal to natural gas at the end of 2013 and 2017 respectively. The Commission also approved closure of Valmont 5 at the end of 2017. As a result of the 2010 Clean Air Clean Jobs Act, the Company will no longer have metro area coal plants at the end of 2017.” Because of this, PSCo no longer needs a coal ash disposal site that it acquired some time ago for these plants, Hyde said. The word “metro” is a reference to the Denver area.

On its website, PSCo said that Cherokee is a four-unit coal plant with 717 MW of total capacity that takes low-sulfur coal from Colorado mines. “We will early retire Cherokee Units 1, 2 and 3 (365 MW), which operate on coal, and install a cleaner, more efficient natural gas plant (569 MW) at the plant site,” said the website. “We also will switch Cherokee Unit 4 from using coal to natural gas (352 MW).” The website said the plan was to retire Unit 2 by December 2011, Unit 1 by June 2012, Unit 3 by 2015, with Unit 4 switched to natural gas in 2017. The 569-MW gas plant would be online in 2015. “A new pipeline is needed to deliver the natural gas to our Cherokee power plant for this conversion,” the website added. “We are proposing to construct approximately 34 miles of new, 24” steel gas transmission pipeline from a new Ft. Lupton gas metering facility to the Cherokee Generating Station. Construction on the new natural gas pipeline would begin in 2013 with an anticipated in-service date of Oct. 1, 2014.”

Arapahoe is a coal-fired plant with two operating units: Unit 3 at 44 MW and Unit 4 at 109 MW. The plant burns low-sulfur coal from the Powder River Basin in Wyoming, said the utility website. Arapahoe Unit 3 will be shut down and Unit 4 will switch to natural gas by 2013.

Zuni is a 65-MW natural gas- or oil-fired electric generating station that also supplies steam for delivery to thermal energy customers in downtown Denver.

Valmont has two Xcel Energy operating units. Unit 5 is a coal-fired, steam-electric generating unit that can also use natural gas as fuel with capacity of 229 MW. It uses low-sulfur coal from western Colorado mines, said the company website. As noted, Valmont Unit 5 will be shut down by 2017.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.