Oglethorpe adds new nuclear and gas, retrofits coal capacity

Georgia-based Oglethorpe Power is pursuing for the long term the development of new nuclear capacity at the Vogtle plant, but in the meantime has been aggressive lately in acquiring new gas-fired capacity to fill its near-term needs.

Through its agent, Georgia Power, Oglethorpe and the other co-owners of Vogtle have contracted with Southern Nuclear, Westinghouse and Stone & Webster, experienced developers and contractors, to construct two additional nuclear units at the site. The additional units will have a total capacity of about 2,200 MW, with Oglethorpe’s 30% undivided interest giving it the right to 660 MW of that capacity. On Feb. 10, the Nuclear Regulatory Commission (NRC) issued the combined construction permits and operating licenses for the new units which have planned commercial operation dates of 2016 and 2017.

The estimated total cost for Oglethorpe’s interest in the two units, including allowance for funds used during construction, is approximately $4.2bn, and, as of Dec. 31, 2011, its construction work in progress for this project was approximately $1.3bn, Oglethorpe said in its March 20 annual Form 10-K report.

The NRC certified the AP1000 reactor design effective Dec. 30, 2011. On Feb. 10, the NRC issued combined licenses for Vogtle Units 3 and 4. On Feb. 16, a group of four plaintiffs who had intervened in the NRC’s license proceedings filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit seeking judicial review and a stay of the NRC’s issuance of the license. In addition, on Feb. 16, a group of nine plaintiffs filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit seeking judicial review of the NRC’s certification of reactor design. “The owners intend to vigorously contest these petitions,” the Form 10-K said.

In the meantime, Oglethorpe has been nailing down other generating capacity, while backing away from biomass and gas projects.

  • In May 2009, it acquired the Hawk Road Energy Facility, a 500-MW peaking facility with three combustion turbines in Heard County, Ga.
  • In October 2009, it acquired the Hartwell Energy Facility, a 300-MW oil and gas-fired peaking facility in Hart County, Ga., that consists of two combustion turbines.
  • In April 2011, Oglethorpe acquired the Murray Energy Facility, a 1,250-MW natural gas-fired facility near Dalton, Ga., that consists of two combined cycle units. With the acquisition of Murray, it cancelled a 605-MW combined cycle facility that was under development.
  • Oglethorpe members had subscribed for a 100-MW biomass-fueled plant. It acquired a site in Warren County, Ga., conducted preliminary engineering work and environmental analyses, and requested proposals for major equipment and for an engineering, procurement and construction contract. However, due primarily to regulatory and legislative uncertainty, it has deferred this plant.

Oglethorpe spending big to retrofit two coal plants

Capital investment by Oglethorpe is also going to emissions control projects at coal-fired power units that it co-owns with Georgia Power. Environmental compliance projects currently underway include the installation of flue gas desulfurization (FGD) equipment and a selective catalytic reduction (SCR) system at the giant Scherer plant, both of which are expected to be in-service by 2014. In addition, a project to reduce mercury emissions at Wansley may commence later in 2012, and if built, is expected to be in-service by 2016.

In August 2011, the U.S. Environmental Protection Agency finalized the Cross-State Air Pollution Rule (CSAPR), which was due to take effect Jan. 1. But a federal appeals court on Dec. 30, 2011, put the rule on hold, probably for much of this year, while various appeals of the rule are argued out. This rule could have required the purchase of emission allowances or limited operations at the Scherer plant during off-peak periods or a combination of the two in 2012, Oglethorpe noted.

“While the outcome of these CSAPR proceedings may affect the future operations of our co-owned units at Plants Scherer and Wansley, given that additional emission control systems will be coming on line beginning in 2013 at Plant Scherer, we do not expect that the allowance purchases and/or operating limitations described above will be necessary in 2013 and beyond,” Oglethorpe added.

Georgia’s current mercury rules include a “multi-pollutant rule” that requires operation of the existing controls for Wansley and existing and planned controls for Scherer. That includes: SCR systems and scrubbers at Wansley; and activated carbon injection and baghouses, scrubbers and SCR at Scherer. Emission control projects are already underway at Scherer and are expected to be completed by 2014 and to cost about $920m, which includes about $616m spent to date.

EPA’s Mercury and Air Toxic Standards (MATS), issued last December, will likely require further controls at Wansley and/or Scherer for compliance, including but not limited to the potential installation of activated carbon injection and baghouses at Wansley. If required, baghouses at Wansley would likely be installed from 2012 through early 2016 at an approximate cost to Oglethorpe of $150m.

Coal units not running that hard lately

Oglethorpe owns 30% of each of Wansley Unit 1 and Wansley Unit 2, which represents 259.5 MW at each of those units. It owns 60% of each of Scherer Unit 1 and Unit 2, which in each case represents 490.8 MW.

These coal units haven’t been run that hard lately. A reasonably new coal unit like these (they went commercial in the 1970s and 1980s), in any given year with strong power demand and reasonable luck with maintenance and outages, should be able to deliver a capacity factor of over 80%.

The Form 10-K shows that Wansley Unit 1’s capacity factor in 2010 was 53%, actually rising to 56% in 2011. Wansley Unit 2’s capacity factor was 67% in 2010, falling sharply to 47% in 2011. Scherer Unit 1’s capacity factor fell from 89% in 2010 to 64% in 2011. And Scherer Unit 2’s capacity factor tumbled from 90% in 2010, down to 66% in 2011. These figures were in a table in the filing, with no supporting reasons given for low capacity factors last year at these units.

Oglethorpe has interests in 31 operating generating units. The Municipal Electric Authority of Georgia, the city of Dalton and Georgia Power also have interests in nine of these units – at Hatch, Vogtle, Wansley and Scherer. Georgia Power, a unit of Southern Co. (NYSE:SO), serves as operating agent for these units.

Oglethorpe is a Georgia electric membership corporation that is headquartered in metropolitan Atlanta. It is owned by its 39 retail electric distribution cooperative members. It is the largest electric cooperative in the U.S. in terms of assets, kilowatt-hour sales to members and, through its members, consumers served. It is also the second largest power supplier in the state of Georgia.

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.