Arkansas PSC staff witness still opposes Flint Creek retrofit project

Converting the coal-fired Flint Creek power plant to burn natural gas is superior to the proposed environmental retrofit, and acquiring an existing natural gas combined cycle plant in combination with incremental wind resources is also a superior option, wrote Richard Hahn, with consulting firm La Capra Associates.

Rebuttal testimony from Hahn, filed on behalf of the Arkansas Public Service Commission general staff, was lodged Aug. 24 at the commission. The commission is considering an application from Flint Creek co-owners Southwestern Electric Power (SWEPCO) and Arkansas Electric Cooperative (AECC) for approval of environmental retrofits for Flint Creek to comply with new clean-air mandates.

SWEPCO, a unit of American Electric Power (NYSE: AEP), and AECC asked in February for a declaratory order approving installation of $408.7m worth of new emissions controls on Flint Creek. The planned controls include: dry flue gas desulfurization (DFGD) equipment for SO2 control; activated carbon injection (ACI) for mercury; and Low NOx burners and over-fired air for NOx control. The DFGD system selected by the project engineers will also include a pulse jet fabric filter, commonly called a baghouse. Flint Creek is a single-unit, pulverized coal plant with a net capacity of 528 MW and was placed in service in 1978. SWEPCO’s ownership portion of this unit is 264 MW net, and it is responsible for operating and maintaining the plant.

“While retrofit options with coal or gas face uncertainty regarding the long term cost of fuel, the coal option may be subject to future environmental regulations that would require additional investments or premature retirement of the plant, making the decision to undertake a major investment to retrofit Flint Creek undesirable,” Hahn wrote in his Aug 24 testimony. “A better course of action in light of this uncertainty is to choose the option that requires the least upfront investment and provides the greatest flexibility while maintaining reliability, local generation and jobs in northwest Arkansas.”

Hahn said nothing in the rebuttal testimony of SWEPCO or AECC has caused him to change any of his earlier conclusions in the case. SWEPCO’s own 30-year cumulative present worth (CPW) economic analysis using its own assumptions have confirmed that other options that he identified are at economic break-even with the proposed retrofit, he said.

Hahn noted that the four options offered by SWEPCO after certain revisions are:

  • Retrofit the Flint Creek plant with the environmental control equipment originally proposed by SWEPCO, including a selective catalytic reduction system (SCR) installed in 2016 (i.e., at the same time as the other equipment);
  • Convert the Flint Creek plant to natural gas in 2016 with an SCR installed in 2016. Also in 2016, install 230 MW of nameplate wind capacity located in Oklahoma with an assumed capacity factor of 45% and an assumed capacity value of 5% of nameplate capacity;
  • Retire the Flint Creek plant in 2016. Install a new 250-MW natural gas fired combined cycle (NGCC) plant at the Flint Creek site in 2016. Also in 2016, install 95 MW of nameplate wind capacity located in Oklahoma with an assumed capacity factor of 45% and an assumed capacity value of 5% of nameplate capacity; and
  • Retire the Flint Creek plant in 2016. Assume the acquisition of 250 MW of an existing NGCC plant located in the Public Service Co. of Oklahoma (PSO) service territory in 2016. Also in 2016, install 95 MW of nameplate wind capacity located in Oklahoma with an assumed capacity factor of 45% and an assumed capacity value of 5% of nameplate capacity.

Hahn says court action to strike down CSAPR has little impact

Hahn said even the Aug. 21 appeals court decision that struck down the Cross-State Air Pollution Rule doesn’t change his conclusion that the retrofits aren’t the way to go. “The recent U.S. Court of Appeals decision to remand the EPA’s Cross State Air Pollution Rule back to the EPA notwithstanding, a host of new and tightened regulations affecting coal generation are being finalized and implemented over the next few years. For example, the proposed retrofit is driven by two of the more prominent new air emissions rules on the verge of implementation: Mercury and Air Toxics Standards and the Regional Haze Rule. These regulations are designed to reduce emissions of SO2, NOX, and mercury from utility power plants.“

Hahn added that EPA is also in the process of finalizing rules under the Clean Water Act and the Resource Conservation and Recovery Act that could potentially require upgrades in power plants’ cooling water intake structures and coal ash disposal facilities. Also, there continues to be concerted efforts to place restrictions on the emissions of CO2 from power plants.

“The push to reduce coal generation is aided by the current glut of natural gas supplies and the lowest prices in a decade,” Hahn wrote. “This has caused some coal plants to shut down, and others to be dispatched significantly less than in the past. So a key question to ask is whether or not the current trend of placing more and more restrictions on coal plants will continue, or will it be abated or abandoned altogether.”

Witness for Attorney General says more analysis needed

Kevin Woodruff of consultant Woodruff Expert Services, said in Aug. 24 rebuttal testimony filed on behalf of the state Attorney General that he still believes it is possible that the retrofit project will be the least costly option for meeting SWEPCO and AECC loads. But he also still does not believe that either SWEPCO’s or AECC’s analyses are complete enough for the commission to make a fully informed decision about the project’s value.

SWEPCO and AECC should also continue their efforts to develop local generation and transmission network upgrades in northwest Arkansas to enhance the reliability of service and expand generation options for serving load in the area, he added.

Asked if the appeals court decision on CSAPR would have any impact on this planning process, Woodruff said he didn’t think so. Based on his reading of prior SWEPCO testimony, it appears the environmental compliance requirements this project is addressing are not mandated by CSAPR and thus still need to be met. “But there may be some impact on inputs to the utilities’ analyses, such as the Plant’s future capital additions and forecast fuel prices,” he added.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.