Alstom wins contract for two Homer City scrubbers

Alstom said April 13 that it has been awarded a $95m contract to supply dry flue gas desulphurization (DFGD) systems for two 660-MW, coal-fired units at the Homer City plant in Indiana County, Pa.

Alstom’s Knoxville, Tennessee-based North American Environmental Control Systems (ECS) team will supply NID system reactors, fabric filters, mixer and hydrators, inlet and outlet plenums, lime storage and feed systems, and activated carbon injection equipment to Kiewit Power Constructors under a turnkey EPC agreement for the environmental upgrades. The vast majority of manufacturing activities associated with Alstom’s role in the Homer City NID deployment will take place within the U.S.

The NID DFGD technology provides a single, easily deployed platform that significantly lowers particulate emissions and provides full compliance with the latest U.S. government environmental regulations, Alstom said. Alstom technology was selected thanks to its lower overall lifecycle evaluated costs and non-financial selection criteria. The NID system’s compact modular design offers a convenient retrofit solution for existing power plants and its low installed and operating costs make it an attractive solution for environmental compliance, Alstom added.

Alstom has installed more than 60 NID systems worldwide. The Homer City project represents Alstom’s third recent NID project involving pulverized coal boilers in the U.S. The NID unit at NRG Energy’s Indian River Unit 4 (400 MW) is in the final stages of commissioning, and a second system at Unit 3 of Dominion Resources’ Brayton Point coal plant (630 MW) in Massachusetts is under construction and scheduled to begin service in early 2013.

The Homer City was commissioned in 1969 and consists of three 660-MW units. Alstom previously supplied selective catalytic reduction and wet FGD systems for Unit 3 at Homer City.

Edison International having trouble with scrubber financing

EME Homer City Generation, due largely to problems raising new money to install these new scrubbers, may cease to exist, said EME Homer City in a delayed March 28 annual Form 10-K report. EME Homer City, which leases the Homer City plant from financial entities, is controlled by Edison International (NYSE: EIX). EME Homer City normally files its Form 10-Ks and Form 10-Q quarterly reports the same day as Edison International, but this time it took an extra month to file the EME Homer City report, since the Edison International Form 10-K was lodged on Feb. 29.

EME Homer City, called simply “Homer City” in the filing, was formed for the purpose of in 1999 acquiring, owning and operating three coal-fired units and related facilities located in Indiana County with an aggregate capacity of 1,884 MW.

The consolidated financial statements in the Form 10-K were prepared assuming that EME Homer City will continue as a going concern. “The reduction in energy prices experienced in the fourth quarter of 2011 and into 2012 has adversely impacted cash flow, and Homer City is not expected to be able to generate sufficient cash flow from operations necessary to meet its obligations, including the obligations under the Homer City lease,” said the filing. “As described further below under Homer City Lease, it is unlikely that Homer City will continue as a going concern throughout 2012.”

During the fourth quarter of 2011, EME Homer City failed to obtain sufficient interest from market participants necessary to fund the capital needed to make environmental improvements under the current lease arrangement. “The estimated cost of installing SO2 and particulate emissions control equipment for Units 1 and 2 of the Homer City plant is expected to be approximately $700 million to $750 million,” said the Form 10-K. “Homer City does not currently have sufficient capital and does not expect to generate sufficient funds from operations to complete retrofits. Restrictions under the agreements entered into as part of Homer City’s 2001 sale-leaseback transaction affect, and in some cases significantly limit or prohibit, Homer City’s ability to incur indebtedness or make capital expenditures.”

EME settles issues with General Electric Capital

On March 29, Homer City and General Electric Capital Corp. entered into an implementation agreement on engineering, procurement and construction of certain environmental improvements at the Homer City plant, said EME in an April 3 SEC filing.

The agreement provides that an affiliate of the GE-controlled owner-lessors of the Homer City plant will enter into an engineering, procurement and construction agreement and other related construction agreements as necessary for the environmental improvements and will have discretion over all decisions related to any such construction agreements. Homer City agreed to use commercially reasonable efforts to provide assistance to GE and its affiliates in connection with the performance of GE’s obligations under the construction agreements.

The agreement also gives GE the right to cause Homer City to consummate one or more “Implementation Transactions” or “Alternative Transactions” for the divestiture of its interest in the Homer City plant and, if requested, to assist GE in obtaining certain third-party consents or waivers. Homer City and GE also agreed to enter into a transition services agreement in connection with any Implementation Transaction or Alternative Transaction. GE agreed to waive, to cause the GE owner-lessors of the Homer City plant to waive, and to use commercially reasonable efforts to cause the owner-lessor owned and controlled by Metropolitan Life Insurance (MetLife) to waive, any rent default event occurring during the effectiveness of the agreement under the sale-leaseback documents for all purposes other than the restrictions on distributions from Homer City related to equity or subordinated indebtedness.

In addition, Homer City and GE agree to take commercially reasonable efforts to facilitate MetLife’s involvement in any Implementation Transaction or Alternative Transaction and to amend the agreement to allow for MetLife to become a party.

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.