Alliant Energy (NYSE: LNT) is making progress with various emissions control projects at various coal-fired plants, including an April groundbreaking on new controls at the Columbia plant in Wisconsin, said Patricia Kampling, Chairman, President and CEO, in a May 4 earnings call.
“Our plans include retrofitting our Tier 1 coal plants, investigating less expensive emission controls for our Tier 2 Units and increasing the amount of gas-fired generation in our portfolio,” said Kampling. Alliant is pursuing a $4bn capital expenditure plan for 2012 to 2015. “At [Wisconsin Power and Light], we are in the construction phase at Edgewater 5 for [selective catalytic reduction] and our Columbia Unit 1 and 2 baghouses and scrubbers. We are pleased to report that the Edgewater 5 project is proceeding within budget and is a bit ahead of schedule. This project capital expenditures excluding AFUDC are estimated to be $145 million and the controls are expected to be in service by the end of 2012. Last month, we broke ground on $627 million of controls at Columbia. The WP&L portion of this project is approximately $300 million and the controls are expected to be in service in the first half of 2014.”
At Interstate Power and Light (IPL), baghouses and scrubbers are currently being installed at George Neal Units 3 and 4. IPL’s portion of the total capital expenditures excluding AFUDC is estimated to be about $130m. IPL and partners are finalizing engineering, procurement and construction contract for the scrubber and baghouse at the Ottumwa facility. IPL’s portion of the capital expenditure for this project excluding AFUDC is estimated between $150m and $170m.
Edgewater 5 scrubber and baghouse project in the works
“The environmental work underway at IPL’s Ottumwa and Neal facilities and WPL’s Edgewater and Columbia facilities supports compliance with current environmental rules,” Kampling noted. “This year, we plan to request regulatory approval to install the remaining controls for our Tier 1 facilities. They will be ready to comply with the [Cross-State Air Pollution Rule (CSAPR)] or some new version of it. In Iowa, through the emissions plan and budget filing made on April 2nd, we are proposing adding a scrubber to Lansing 4, which is already in our 2012 to 2015 capital plan. In Wisconsin, we plan to file a construction authorization request for a scrubber and baghouse at Edgewater 5. This filing is planned for the third quarter of 2012 and if approved is expected to add to the capital expenditures post 2015.”
Alliant is still assessing if a current court stay on CSAPR or the final utility Maximum Achievable Control Technology/Mercury and Air Toxics Standards rule would change the current Tier 2 capital expenditure projections for 2012 to 2015 of $100m. Alliant is exploring lower cost emission control options for these Tier 2 units. “The future of our Tier 2 units is heavily dependent on the evolving environmental rules and reliability requirements of the MISO region,” Kampling said.
“While we continue to rely on lower-emissions Powder River Basin coal for the majority of our baseload generation, our emissions from our coal plants will continue to decline as our retrofits become operational,” Kampling said. “In addition, our emissions profile also improves as we convert some of our older, less efficient units to run on natural gas as we have done with IPL Sutherland Unit 1 and 3 and the Dubuque Generating Facility.”
Alliant coal burn to fall sharply in 2012
Kampling also noted that Alliant began this year with 80% of its coal needs under contract for 2012. “Because we had an open position, our customers have benefited from the low spot market prices of coal, while our coal inventories are currently within a normal range,” Kampling said. “We do not anticipate any issues with coal or transportation contract take-or-pay provisions. Alliant is projecting to burn just under 11 million tons of coal in 2012 versus 13 million tons in 2011.”
Natural gas generation is becoming increasingly important in balancing Alliant’s energy portfolio, Kampling pointed out. In April, the Public Service Commission of Wisconsin (PSCW) approved WPL’s purchase of the Riverside Energy Center, a 600-MW, combined cycle facility.
The strategic plans for Alliant Energy, IPL and WPL include building or buying natural gas-fired electric generating facilities, implementing emission controls and performance upgrades at their more-efficient coal units, constructing a new wind generating facility, and fuel switching at, and retirement of, certain older and less-efficient coal-fired generating facilities, said Alliant’s May 4 Form 10-Q filing. Key strategic plan developments impacting Alliant Energy, IPL and WPL during 2012 include:
- March 2012—The Midwest ISO indicated that the retirement of WPL’s coal-fired Nelson Dewey Units 1 and 2 may result in reliability issues and that transmission upgrades are necessary to enable the retirement. Under the current MISO tariff, the specific timing for the retirement of Nelson Dewey Units 1 and 2 could depend on the timing of the required transmission upgrades and various operational, market and other factors. Nelson Dewey is a 208-MW facility located in Cassville, Wisc., which includes two units (Unit 1 and Unit 2) which are configured to burn coal.
- April 2012—The PSCW approved WPL’s application to acquire Riverside for approximately $393m by the end of 2012. Subject to regulatory approvals, WPL currently plans to complete the acquisition in December 2012.
- April 2012—IPL and MidAmerican Energy each filed an updated Emissions Plan and Budget (EPB) with the Iowa Utilities Board. IPL’s EPB includes emission control projects for Ottumwa Unit 1 and Lansing Unit 4. MidAmerican’s EPB includes emission control projects for George Neal Units 3 and 4. Alliant Energy and IPL currently expect the IUB to issue their decisions on IPL’s and MidAmerican’s EPBs by the end of 2012.
IPL received numerous proposals in response to a request for proposals (RFP) issued in January seeking firm long-term supplies of non-intermittent capacity and energy delivered to IPL’s control area. The RFP solicited ownership and/or long-term power purchase agreement (PPA) proposals for either new or existing resources or access to a portion of the output of a portfolio of system resources. IPL is currently evaluating the proposals from the RFP as part of the due diligence process for the potential construction of a new, 600-MW natural gas-fired combined-cycle facility and expects to make a decision regarding its plans to meet the future demands of its customers in the third quarter of 2012.