Construction and testing of new dry sorbent injection (DSI) systems on Gallagher Units 2 and 4 were substantially complete in 2010, and since then Duke Energy Indiana has been able to maintain the required sulfur limits on a 30-day rolling average without issue.
Joseph Miller, Jr., employed by Duke Energy Business Services LLC as General Manager, Analytical & Investment Engineering, was one of several Duke officials that provided May 23 testimony to the Indiana Utility Regulatory Commission in an environmental cost rider case. Duke Energy Business Services is a service company subsidiary of Duke Energy (NYSE: DUK).
Asked if the DSI installations are causing any need for ash fixation for the units, Miller wrote: “Not at this time. The Company continues to assess the need for ash fixation in the landfill. The Company has monitored the stability of the landfill since operation of the DSI System began in October 2010. With only a moderate amount of fill at this time, Duke Energy Indiana has not installed the necessary equipment for ash fixation. However, if ash fixation does ultimately become necessary once more substantial amounts of the dry sorbent are added to the landfill, the Company’s estimate of $5 million for the required equipment remains reasonable.”
Duke Energy Indiana’s electric generating properties consist of: four primarily coal-fired plants (Cayuga, Gallagher, Gibson, and Wabash River) having a total of 14 individual generating units; one hydroelectric generating station; the Noblesville Repowering Project; and 38 rapid-start peaking units. The coal-fired stations use primarily Illinois Basin coals from mines located in Indiana. In excess of 90% of the energy generated by Duke Energy Indiana comes from coal-fired plants.
Much of the testimony from Duke Energy Indiana witnesses in this proceeding was filed under seal, so a lot of the more sensitive facts aren’t available. No major no new emissions control projects were revealed. Diana Douglas, who works for Duke Energy Business Services as Director, Rates, noted that under a consent decree entered into by the company and the Department of Justice on behalf of the U.S. Environmental Protection Agency in a New Source Review case, the company retired Gallagher Units 1 and 3 at the end of January.
John Griffith, who works for Duke Energy Business Services as Director, Portfolio Optimization, Fuel and Emissions, discussed accounting for emissions allowances (EAs). One point of note is that emissions planning had to change after a federal court a while back invalidated EPA’s prior Clean Air Interstate Rule (CAIR), with a federal court in December 2011 staying the replacement Cross-State Air Pollution Rule (CSAPR) while legal appeals are in process. The court left CAIR in place in the interim.
“Currently, our positions in CAIR SO2, seasonal and annual NOx EAs are longer than would be required for compliance through the 2015 compliance period,” Griffith wrote. “We believe this reflects an appropriate level of caution about the uncertain timing of the phase-out of CAIR and the implementation of CSAPR, combined with our expectations of more restrictive future emissions requirements.”
He added: “There continues to be considerable uncertainty about the Company’s EA positions given the effects of future power, coal and gas pricing on the Company’s generation fleet, along with the legal uncertainty surrounding CAIR and CSAPR. We continue to assess the EA market and developments in the current CSAPR litigation, in anticipation of a resolution to the litigation and the expectation of improved clarity for future emissions compliance under CAIR or under CSAPR. To return to and maintain balanced EA positions, we expect to be able to use the EA market to buy and sell EAs as needed, passing through to customers the costs of purchases and the gains or losses on sales in the normal course of business.”