Midwest Generation is fairly committed to saving and retrofitting with emissions controls the coal-fired Waukegan units 7 and 8, but needs more time to sort out ever-changing clean-air needs before installing new SO2 control equipment on one of the units.
Midwest Generation, a unit of Edison International (NYSE: EIX), applied on April 10 with the Illinois Pollution Control Board for a variance on the state’s Combined Pollutant Standard (CPS) “in order to avoid arbitrary and unreasonable hardship by permitting the company to adapt to unanticipated conditions that have evolved since the adoption of the CPS.”
Midwest Generation wants a variance from the compliance dates applicable to Waukegan 7 for the installation of flue gas desulfurization (FGD) equipment and the conversion of the hot-side precipitator on that unit. The requested variance is for a period of one year only, from Dec. 31, 2013, until Dec. 31, 2014, with no change in the existing emission rate limits of the combined standard.
The company said it needs this variance for a couple of reasons. “First, a significant, ongoing deterioration in energy market prices combined with the development of substantial new federal environmental regulations layered on top of the CPS have made long-term investment in the smallest generating units in the Midwest Generation fleet questionable and subject to reconsideration at this time. Second, the CPS requires Waukegan Unit 8 to be retrofitted with FGD equipment by December 31, 2014; in bidding construction work for pollution control installations since the CPS was adopted, Midwest Generation has determined that in this circumstance it can gain cost and other efficiencies by sequencing the Waukegan units’ installation of FGD equipment within a concurrent time period. None of the above conditions were foreseen when the CPS was adopted; therefore, to enforce the CPS as written would impose undue economic hardship on Midwest Generation.”
Also, this proposal complements Midwest Generation’s announcement on Feb. 29 that it will retire the coal-fired unit at the Fisk plant in Chicago by no later than Dec. 31, 2012, and the coal-fired units at the Crawford plant, also in Chicago, by no later than Dec. 31, 2014. Those retirements are the result of economic conditions in the energy market and Midwest Generation’s desire to settle a longstanding debate in Chicago over a Clean Power Ordinance which proposed to layer additional air emission regulations at the local/municipal level. The Fisk and Crawford retirements are subject to PJM rule for power grid reliability purposes and Midwest Generation said it would notify the board if PJM comes back with any changes to the shutdown schedule.
Notable is that in early May, after the filing of the variance request, the company said it has accelerated the timelines for closure of both Fisk and Crawford to September 2012. Midwest Generation on May 4 filed with the board letters from PJM saying there would be no problems with the shutdown of the Fisk and Crawford units on the original schedule.
Four major environmental groups, considering the plans for early shutdown of Fisk and Crawford, don’t oppose the variance for Waukegan Unit 7, the company added.
Waukegan is a 689-MW, coal plant located in Waukegan, Lake County, on Lake Michigan. The operating units are referred to as Units 7 and 8 and began operations in 1958 and 1962, respectively. Midwest Generation shut down permanently unit 6, with 100 MW of capacity, in December 2007.
Dry scrubbers too costly, so plans shift to dry sorbent injection
To comply with the CPS requirement for FGD installations at Waukegan, Midwest Generation examined several alternatives. It initially evaluated retrofitting Waukegan 7 with a spray dryer absorber dry scrubber (dry scrubber) in order to meet the FGD equipment requirement and a baghouse in order to comply with the additional requirement of the CPS to install a baghouse or convert from a hot- to cold-side ESP to achieve additional mercury emission reductions.
In 2006, Midwest Generation estimated that the cost for a dry scrubber and baghouse was approximately $240m, based on an engineering study conducted for the company by Shaw. The lack of available, adequate space at Waukegan 7 was part of the cost and scheduling issue. In order to accommodate a dry scrubber and baghouse, Midwest Generation would have to fill in part of the circulating water inlet canal, which in itself would require various permits.
Escalating costs and the onset of the nationwide recession caused Midwest Generation to reevaluate the SO2 control strategy and FGD equipment for Waukegan 7 in 2009. At this time, Midwest Generation determined that the cost of installing a dry sorbent injection system using Trona as the reagent to meet the FGD equipment requirement would cost about $18m, while ensuring compliance with the CPS. Plans are also in play to convert the ESP from hot- to cold-side at a cost of $70m, rather than installing a baghouse. Therefore, total FGD equipment and mercury removal costs have been reduced from an estimated $240m in 2006 to $88m.
Midwest Generation began construction of the dry sorbent injection system in the fall of 2011 but has obtained an extension of the construction permit to allow it time to re-evaluate in light of developments. To install the dry sorbent injection system, Midwest Generation will need to engineer, procure, and install equipment designed to inject a dry sorbent reagent (Trona) into the flue gas stream exiting the boiler before it goes out the stack. This equipment includes Trona unloading equipment, on-site Trona storage, milling equipment needed to grind the Trona, and blowers necessary to transport and distribute it into the flue gas stream to react with the SO2.
Additionally, the ESP will need to be upgraded to remove the added particulate loading resulting from the process. Planned upgrades to the ESP for Waukegan 7 include conversion from the hot-side ESP to a cold-side ESP configuration. Upgrades to the ash removal system are also needed to handle the additional solid particulates that will be collected in the ESP.
New EPA rules throw a monkey wrench into the decision process
The company said some of the new uncertainty is related to the U.S. Environmental Protection Agency’s new Cross-State Air Pollution Rule (CSAPR), which covers SO2 and NOx emissions, and the Mercury and Air Toxics Standards, which cover toxic emissions like mercury. Both rules are under appeal in court and have current deadlines that tend to converge around 2015.
“This set of compliance deadlines converging on 2015 creates overlapping, significant SO2, mercury, and PM emission reduction obligations that conflict with the CPS’s 2013 deadlines applicable to Waukegan Unit 7,” Midwest Generation noted. “The one-year extension sought herein would help synchronize these various regulatory timing requirements and would also impose the same CPS compliance deadline for Waukegan Units 7 and 8, improving efficiency and providing cost savings, as mentioned above. In addition, the pending CSAPR appeal and stay and the pending MATS appeal create uncertainties about the timing and scope of the requirements that may survive appeal. At least some of this uncertainty could be alleviated by deferring the deadlines at issue for Waukegan 7, thus potentially providing an opportunity for greater clarity and better decision-making before action must be commenced to physically address PM and SO2 compliance.”
Under the CPS, both Waukegan units were among the first in the nation to install mercury control equipment. Since 2007, mercury emissions at Waukegan have been reduced from about 231 pounds per year to less than 80 pounds per year. Since 2008, Waukegan Unit 8 has achieved significant mercury reductions, consistently measuring greater than 90%, well in advance of the federal compliance deadline. Unit 7 is now achieving mercury emission reductions in the range of 72% when the unit operates at lower loads, with the percentage rate going down at higher loads.
Midwest Generation on May 15 filed a notice with the board that it waives a board deadline to decide this case until Aug. 23.