The North Dakota Public Service Commission plans a March 26 work session on separate applications by Montana-Dakota Utilities and Otter Tail Power for advanced prudency approvals on costs associated with new air controls for the coal-fired Big Stone power plant.
Montana-Dakota Utilities is part of MDU Resources Group (NYSE:MDU).
A settlement with commission advocacy staff in both prudency cases was filed Jan. 9 with the commission on the new air controls, which are needed to comply with the South Dakota Regional Haze Rule. The companies also want commission approval for the installation of mercury control equipment at the Big Stone plant to comply with national emissions standards for hazardous air pollutants proposed by the U.S. Environmental Protection Agency.
Big Stone is a 475-MW plant located near Milbank, S.D. Big Stone is jointly owned by the applicants and also NorthWestern Corp. d/b/a NorthWestern Energy (NYSE:NWE). Otter Tail holds a 53.9% ownership interest in the plant and acts as its operating agent. Montana-Dakota holds a 22.7% ownership interest.
The proposed air controls consist of a semi-dry flue gas desulfurization system to reduce SO2 emissions, selective catalytic reduction with separated overfire air to control NOx emissions, and balance of plant modifications necessary to install and operate the control technologies, including a replacement baghouse and boiler modifications. This combination of emissions control technologies has been deemed Best Available Retrofit Technology (BART) by the South Dakota Department of Environment and Natural Resources in its Regional Haze State Implementation Plan (SIP). The applicants also propose to install activated carbon injection (ACI) at the plant to control mercury emissions.
The estimated capital cost to install these technologies is $489,397,400 (2015 dollars) with an accuracy of +/-20%, said the January settlement. The South Dakota SIP and its implementing rules provide that the air quality control system (AQCS) be installed as expeditiously as practicable but not later than five years from the EPA’s approval of the SIP. The implementation schedule for the air systems anticipates a commercial operation date by the end of 2015.
At a November 2011 hearing, the commission heard testimony from the applicants regarding the importance of the Big Stone plant as a baseload resource, the regulatory need for the AQCS and ACI projects, the cost of the proposed projects, the reasonableness of the cost estimates, and an analysis of the cost of the AQCS project as compared to the cost of the viable alternatives for compliance. Jeffrey Kopp of consultant Burns & McDonnell testified that the AQCS is the least cost option by a significant margin as compared to the natural gas alternatives studied, the settlement noted. Richard Hahn, testifying on behalf of commission advocacy staff, stated that the component technologies of the AQCS and the project cost estimate were reasonable and he recommended the AQCS as the preferred option.
“Integrated Resource Plans submitted by the applicants, additional analysis conducted by or on behalf of the plant co-owners, and analysis conducted by the advocacy staff’s consultant demonstrate the AQCS is a reasonable and prudent project that will provide cost effective and reliable electric generation for the applicants and their customers in compliance with state and federal law,” the settlement said. But final approval of the AQCS should await the final approval by EPA of the South Dakota SIP for regional haze, and final approval for the ACI system should be held until the EPA approves final hazardous air rules, the settlement said.
In its Feb. 24 annual Form 10-K filing, MDU Resources said about air emissions needs: “Montana-Dakota incurred $3.6 million of environmental capital expenditures in 2011. Capital expenditures are estimated to be $15.3 million, $47.8 million and $90.0 million in 2012, 2013 and 2014, respectively, to maintain environmental compliance as new emission controls are required, including the installation of a BART air quality control system at the Big Stone station. Additional expenditures for this BART project are expected during 2015 and 2016 of approximately $40.0 million.”