The owners and operator of the coal-fired, 1,884-MW Homer City power plant in central Pennsylvania have decided to build up to $700m worth of new SO2 scrubbers and baghouses on the two units of the three-unit plant that currently don’t have that equipment.
The installation of the scrubbers and related work will greatly reduce mercury, SO2 and particulate emissions, Edison Mission Energy executives said. Company officials on Jan. 10 held an open house about the company’s plans at a site located near the power plant. Edison Mission Energy is a unit of Edison International (NYSE:EIX).
Early last decade, a scrubber was installed on Homer City Unit 1 to meet prior clean-air needs. But now, with new U.S. Environmental Protection Agency mandates in play, like the Cross-State Air Pollution Rule, Edison Mission Energy is adding to that prior investment in the plant’s future operation.
Edison Mission Energy’s EME Homer City Generation unit actually runs the plant, while plant ownership is held by several financial entities that lease the plant back to the operator. Backers have applied for state permits to install scrubbers and perform other upgrades on two older units, Units 1 and 2. EME spokesman Douglas McFarlan said the project price tag includes mainly two scrubbers and new baghouses installed on Unit 1 and 2, plus other improvements like water discharge changes and new ash landfill facilities for the whole plant. There is already selective catalytic reduction (SCR) equipment for NOx control on all three units.
McFarlan noted that the company is also working on the financing for this project and hopes to have that, plus a state-issued air permit, in hand by the end of March, with a project construction start possible in April and completion in early 2014. Pre-construction work at the site has already begun, he added.
The company has chosen a dry scrubber technology from Kiewit for Units 1 and 2, as opposed to the wet scrubber technology installed on Unit 3. Reasons for picking the dry scrubber system include a need to deal with water usage issues at the plant, McFarlan noted.
The plant burns about 5 million tons per year of coal, largely from coal mines around the plant delivered by truck from companies like Rosebud Mining, and more distant coal from longwall-equipped mines in southwest Pennsylvania. Like the existing Unit 3 scrubber, the Units 1 and 2 scrubbers will allow the company more flexibility to burn higher-sulfur coal, McFarlan noted.
EME Homer City pointed out the need for project financing for these emissions retrofits in its Nov. 2, 2011, Form 10-Q report. “Homer City does not currently have sufficient capital and does not expect to generate sufficient funds from operations to complete such retrofits and will have to seek third-party financing, which will be subject to decisions by Homer City’s lessors, holders of bonds who provided financing for the sale-leaseback transaction and new providers of capital funding,” the report said. “There is no assurance that sufficient financing will be obtained or will not result in significant dilution of Homer City’s interest in the Homer City plant.”
Energy and capacity from the Homer City plant are sold under terms, including price, duration and quantity, arranged by Edison Mission Marketing & Trading with customers through a combination of bilateral agreements (resulting from negotiations or from auctions), forward energy sales and spot market sales. That means Homer City is subject to market risks related to the price of energy and capacity from the Homer City plant. Power generated at the Homer City plant is primarily sold into PJM, with sales also made into the New York ISO.
The Homer City plant is located on a 2,413-acre site about 45 miles northeast of Pittsburgh in Indiana County, Pa. The plant consists of the three units, a coal cleaning facility, water supply provided by a 1,800-acre reservoir site known as Two Lick Dam, which is not part of the 2,413-acre site, and associated support facilities. The Homer City generating units benefit from direct transmission access to both PJM and NYISO through seven high voltage lines which interconnect through a switchyard located on the site.
Units 1 and 2 were placed into commercial operation in 1969. Unit 1 has an installed capacity of 620 MW and Unit 2 has an installed capacity of 614 MW. Unit 3 commenced commercial operation in 1977 and has an installed capacity of 650 MW. The scrubber and SCR system for Unit 3 were installed in 2001.