Dairyland Power Cooperative said June 29 that has reached a joint settlement agreement with the U.S. Environmental Protection Agency and the Sierra Club that calls for no new retirements of coal-fired capacity.
The settlement concludes litigation on alleged violations of the New Source Review (NSR) provisions of the Clean Air Act. Dairyland in this deal is admitting no violations of law, and all claims against Dairyland based on facility modifications prior to the settlement were released by the other parties.
“A long, drawn out legal battle would not be in the best financial interest of Dairyland’s members and, since we had already begun adding hundreds of millions of dollars of air emission controls at our power plants, we agreed to work toward a settlement to reduce the risk of uncertain outcomes and the accompanying additional rate pressure for our cooperative consumers,” said Bill Berg, Dairyland President and CEO.
Berg added: “The most important part of this consent decree is that it recognizes Dairyland’s major investments in air emission controls at our plants and the significant emissions reductions that have already been achieved at our plants. It also formalizes a commitment for additional air emission controls on our facilities which are compatible with our existing plans.”
The agreement allows Dairyland to keep existing power plants operating, with the addition of already planned controls. The agreement also includes the end of coal-fired generation at the three oldest Alma plant units, which Dairyland already chose to do at the end of 2011. The emission limits on Dairyland’s other coal facilities are consistent with a strategic intent to reduce environmental impacts and the cooperative’s dependence on coal in favor of other resources, Berg said.
Under the agreement, filed in the U.S. District Court for the Western District of Wisconsin, Dairyland agreed to SO2, NOx and particulate emissions limits for coal-fired power plants in Genoa and Alma, Wis. Also, the cooperative agreed to continue to go forward with plans to install new air emissions controls.
Dairyland will also invest $5m over a five-year period in a combination of renewable energy, energy efficiency and public land improvement projects. The terms of the settlement also include a civil penalty of $950,000. “We maintain our position that the civil penalty is inappropriate,” said Berg. “However, similar settlements have included such penalties and always involve compromise.”
The Sierra Club filed a civil suit for alleged violations of the Clean Air Act in June 2010. On Feb. 13, the EPA issued a notice of violation with similar allegations. Even before these filings, Dairyland was already in the midst of a $400m plan to further reduce air emissions.
Dairyland already well on its way to cleaner coal-fired generation
In 2007, Dairyland installed fabric filter “baghouses” designed to remove more than 99% of particulates from the exhaust gas at the Genoa #3 station (G-3) and John P. Madgett (JPM). In 2009, Dairyland completed installation of a semi-dry flue gas desulfurization “scrubber” to remove SO2 at the G-3 plant. Dairyland has also installed equipment to reduce NOx at JPM, G-3 and Alma Units 4-5.
In the settlement, Dairyland agreed to limits in emission rates and total annual amounts emitted for SO2, NOx and particulates for JPM, G-3 and Alma Units 4-5. Dairyland also agreed to install selective catalytic reduction (SCR) or equivalent alternative NOx technology at JPM and selective non-catalytic reduction (SNCR) at G-3. Dairyland has also notified EPA that it will install dry sorbent (DSI) injection to further reduce SO2 emissions at JPM. Additional emission controls will also be installed on Alma Units 4-5. As part of the agreement, Dairyland’s Alma Units 1-3 ceased burning coal as of Dec. 31, 2011.
The consent decree, filed with the court on June 28, said that Dairyland has to cease burning coal in the boilers of Alma Units 1-3 by the end of 2011, and, by no later than June 30, Dairyland has to amend any submissions to Wisconsin’s air emissions inventory, and apply to amend all applicable permits, so as to reflect the “permanent cessation” of coal burning at Alma Units 1-3.
The decree also says that by the end of 2014, Dairyland has to cease burning coal in the boiler of Alma 4, and amend any submissions to Wisconsin’s air emissions inventory, and apply to amend all applicable permits, so as to reflect the fact that Alma 4 has permanently ceased burning coal. But, Dairyland can notify the EPA and Sierra Club in writing on or before Dec. 31, 2012, that it is electing to instead comply with a complicated series of emissions controls or emissions caps for Alma 4-5.
Under this deal, for example, Dairyland has to also:
- Install an SCR at J.P. Madgett and, commencing on June 30, 2016, and continuing thereafter, continuously operate the SCR so that it achieves and maintains a 30-day rolling average NOx emission rate of no greater than 0.080 lb/mmBtu.
- Install SNCR at G-3 and, commencing on June 1, 2015, and continuing thereafter, it has to continuously operate that SNCR.
- Install a dry FGD at J.P. Madgett and, commencing on Dec. 31, 2014, and continuing thereafter, that FGD has to achieve and maintain a 30-day rolling average SO2 emission rate of no greater than 0.090 lb/mmBtu. With prior written notice to EPA, Dairyland may, in lieu of the FGD, install and operate DSI that has been designed for and has been demonstrated to achieve at least 95% SO2 removal efficiency and a 30-day rolling average SO2 emission rate of no greater than 0.080 lb/mmBtu.
- Install either DSI or a dry FGD at Alma Unit 5, and commencing no later than 30 months after the date of entry of the consent decree, and continuing thereafter, it has to continuously operate such DSI or dry FGD on Alma Unit 5 so that it achieves a 30-day rolling average SO2 emission rate of no greater than 1.00 lb/mmBtu. There is also an option for DSI or dry FGD installation at Alma Unit 4.
Dairyland describes how it is working around Alma unit shutdowns
Dairyland isn’t quite ready to permanently retire three seldom-used coal units at its Alma plant, said a May 8 integrated resource plan (IRP) filing by the cooperative at the Minnesota Public Utilities Commission. In the filing, Dairyland indicated that it would prefer to keep Alma Units 1-3 available for now as insurance against potential brief capacity shortfalls. The cooperative said it wants to avoid building expensive new replacement units that won’t get used much.
Dairyland initially filed its IRP for the years 2011-2026 with the commission in September 2011. The commission issued an order finding Dairyland’s IRP filing to be complete in December 2011. On March 8, the state Department of Commerce, Division of Energy Resources, filed comments on the IRP. Dairyland in the May 8 filing rebutted some of the contentions made by the department.
In response to the department’s information request No. 23, Dairyland described to the department how it plans to address the closure of Alma Units 1-3: “If the [Alma 1-3] stations are closed, in the short term, any necessary capacity will be bought from the MISO market or through bilateral contracts. Long term, if capacity is needed (which is uncertain given the MISO shift to MISO coincident peaks), a decision will be made to either continue this practice or to add generation if it can be profitably sold into the MISO market. The decision will not be one of covering [Dairyland] load since this is not an issue within MISO. Several years of economic studies will be needed to make this economic determination.”
The department was responding to the fact that in December 2011, Dairyland said it will cease burning coal in three vintage 1950s units of the Alma plant on Dec. 31, 2011. Alma Units 1-3 are part of the 181-MW plant, located in Alma, Wisc. Together, the three units have about 60 MW of capacity. They account for about 5% of Dairyland’s total capacity, but generated only 0.4% of Dairyland’s energy resources through October 2011. Alma Units 4-5 total about 120 MW of capacity.
With headquarters in La Crosse, Wisc., Dairyland provides wholesale electricity to 25 member distribution cooperatives and 15 municipal utilities in four states (Wisconsin, Minnesota, Iowa and Illinois). Dairyland has an accredited 1,167 MW of generation within the Midwest ISO region. Dairyland’s generation includes:
- Alma, a 210-MW coal-fired baseload plant;
- John P. Madgett, a 400-MW coal-fired baseload plant;
- Genoa Unit 3, about a 50% share of a 380-MW coal-fired baseload unit; and
- Weston Unit 4, about a 165-MW share of a coal-fired baseload unit.