Otter Tail Power is seeking approval from the South Dakota Public Utilities Commission for its share of the costs to add new air emissions controls on the coal-fired Big Stone power plant in South Dakota.
Otter Tail Power (OTP) filed at the request with the commission on March 30. It noted that Big Stone is co-owned by itself, NorthWestern Corp. (NYSE: NWE) d/b/a NorthWestern Energy, and the Montana-Dakota Utilities unit of MDU Resources Group (NYSE: MDU).
NorthWestern filed on April 10 to intervene in this case. The case was also due for a preliminary look by the commission at its April 10 meeting. Otter Tail Power is a unit of Otter Tail Corp. (NASDAQ: OTTR).
The Big Stone boiler was originally designed to burn lignite coal and began operation in 1975. Designed by Babcock & Wilcox, the boiler is a Caroline-type balanced-draft pump-assisted radiant machine.
In 1995, the boiler was converted to burn Powder River Basin (PRB) coal. With the conversion to PRB fuel, a simplified Separated Overfire Air (SOFA) system was installed to reduce NOx emissions. The boiler also has a flue gas recirculation system to control main steam and reheat temperatures. From the boiler, flue gas travels to two air heaters.
The 475-MW unit currently has a conventional pulse-jet fabric filter for control of particulate emissions that will be replaced as part of this project. Ash is currently sent to a fly ash storage silo located south of the plant, where it is then trucked to a landfill. Flue gas from the fabric filter flows to four centrifugal-induced draft (ID) fans. The ID fans discharge the flue gas to the chimney, which has two breech openings.
Under the South Dakota Department of Environmental and Natural Resources (DENR) haze-based State Implementation Plan (SD Haze SIP) OTP is required to install Air Quality Control System (AQCS) equipment at Big Stone to reduce emissions of SO2 and NOx. The AQCS equipment is required based on a Best Available Retrofit Technology (BART) determination adopted by the South Dakota DENR.
The BART determination requires that the AQCS include flue gas desulfurization for SO2 reduction, and selective catalytic reduction with SOFA for NOx. The BART determination did not include mercury reduction requirements. But, because it is expected that the U.S. Environmental Protection Agency’s utility boiler Maximum Achievable Control Technology rule will require mercury reduction when the rule is finalized, activated carbon infection (ACI) was also evaluated as part of the AQCS project.
The implementing rules and the SD Haze SIP require that the Big Stone AQCS be installed as expeditiously as possible but no later than five years from the EPA’s approval of the SD Haze SIP. OTP is projecting that the Big Stone AQCS operation and emissions compliance will be required as early as January 2016.
The following options were analyzed to comply with air mandates:
- implementing the Big Stone AQCS project;
- repowering Big Stone with natural gas;
- retiring/replacing Big Stone with a combined-cycle gas turbine plant; and
- retiring/replacing Big Stone with a combined-cycle gas turbine plant and purchased wind power.
The result of the Big Stone co-owners’ analysis is that the AQCS project is the most economical option under all analyses in the base case. The total cost estimate for the AQCS project is $490m (2015 dollars). OTP’s ownership share in the Big Stone Plant is 53.9%, and therefore OTP is responsible for $264m. OTP’s South Dakota jurisdictional share of this figure is 10% or $26.4m.
The commission has approved similar environmental cost riders for Xcel Energy (NYSE: XEL) and Black Hills Power, OTP noted in its March 30 petition. The commission’s approval for Xcel Energy also included rider recovery for an AQCS project at Xcel Energy’s King plant, which is similar in many respects to the Big Stone AQCS project. Black Hills Power is a unit of Black Hills Corp. (NYSE: BKH).
The Minnesota Public Utilities Commission on Jan. 23 approved OTP’s request for an advance determination of prudence for the Big Stone AQCS project based upon Minnesota law. The company has also filed an advance determination of prudence for the Big Stone AQCS project at the North Dakota Public Service Commission.