Big Rivers Electric, following an Aug. 21 appeals court decision striking down the Cross-State Air Pollution Rule (CSAPR), has agreed to shelve CSAPR-related projects at its coal-fired power plants.
Kentucky Attorney General Jack Conway, citing the Aug. 21 court decision to reject CSAPR, asked the Kentucky Public Service Commission on Aug. 22 to reject a request by Big Rivers Electric for $227.5m in new air controls needed to comply with CSAPR.
The portions of Big Rivers’ April 2 application seeking to amend its environmental surcharge to recover the costs of projects and pollution control equipment to comply with CSAPR should be dismissed without prejudice, Conway wrote. “Based on the Opinion of the D.C. Court of Appeals, the CSAPR is not consistent with the Federal Clean Air Act and is therefore not applicable within the meaning of [Kentucky statutes]. Further, since dismissing the portion of Big Rivers’ Application directly relating to the CSAPR will save electric ratepayers at least $227.5 million in capital costs, as well as related financing and operation and maintenance costs, it follows that Big Rivers’ has failed to meet its burden to show that these projects meet the need required under [Kentucky statutes] at this time.”
Conway said the commission should go ahead with its review of Mercury and Air Toxics Standards (MATS)-related projects. MATS applies to mercury and other air toxics, while CSAPR applies only to NOx and SO2 emissions. Some technologies, like scrubbers, can control emissions of pollutants under both sets of rules.
The Sierra Club noted in its own Aug. 22 motion that the Kentucky Industrial Utility Customers (KIUC) group also wanted the CSAPR matters dismissed. As KIUC pointed out, Big Rivers projects 4, 5, 6 and 7 were intended to comply with CSAPR. The vacatur of CSAPR also compels the dismissal of the remaining portions of Big Rivers’ application, which are projects 8, 9, 10 and 11, the Sierra Club wrote. “While those projects are based on Big Rivers’ intended compliance with [MATS], the Company’s application makes clear that its MATS compliance proposals are intertwined with the CSAPR proposals,” the club added.
More than enough time exists for Big Rivers to submit and the commission to evaluate a revised MATS compliance plan since the deadline for complying with the MATS rule is April 2015 or as late as April 2016, if the one-year extension provided for in the Clean Air Act is granted, the club argued. Incidentally, MATS is also under court appeal, leaving an open question at this point about whether it too will be struck down.
Big Rivers works out deal for project delays
On Aug. 23, Big Rivers filed a stipulated agreement with the commission worked out with various parties, including the Attorney General and KIUC. Among other things, it asks for approval by Oct. 2 for Project 6, which is the conversion of Reid Unit 1 from coal to natural gas, and Projects 8-10, which are activated carbon injection, dry sorbent injection and emissions monitors for units at Coleman, Wilson and Green. It also asks for an approval, or a decision that no approval is needed, for emissions monitors on HMP&L Station Two Units 1-2.
Within the Big Rivers Environmental Compliance Plan, the cooperative is asking for approval of Projects 8-11. Big Rivers said it retains the right to come back later with Projects 4-7.
“Before incurring any costs associated with Projects 8, 9 and 10 (‘MATS Projects’) except those relating to testing, Big Rivers will perform testing, while injecting activated carbon and dry sorbent, to ensure that the MATS Projects will achieve compliance with all applicable MATS particulate limits at Coleman Units 1, 2, and 3, Wilson Unit 1, and Green Units 1 and 2 and will not necessitate Electro-Static Precipitators (‘ESP’) upgrades or the addition of other particulate matter controls at Coleman Units 1, 2 and 3, Wilson Unit 1, and Green Units 1 and 2,” said the stipulated agreement. “At this time, Big Rivers estimates this testing will cost approximately $1,000,000. If this testing denionstrates that the MATS Projects will not achieve compliance with any applicable MATS particulate limit at any unit or will necessitate ESP upgrades or the addition of other particulate matter controls, Big Rivers will not proceed with the respective MATS Project for that unit, but will seek an amendment to its Environmental Compliance Plan that will ensure compliance with all applicable MATS particulate limits. Big Rivers will file the results of the above described testing with the Commission and serve it on all parties after testing on each unit.”
All parties will have 30 days from the date each testing is provided to file comments with the commission relating to the testing, and Big Rivers will not incur any costs associated with the MATS Projects except those relating to testing until 15 days after the close of the comment period for each project. Big Rivers will include the costs associated with this testing in the MATS Projects costs, and will recover those costs though the environmental surcharge.
The AG and Sierra Club agreed to not oppose these requests for relief. The commission would retain jurisdiction to review the 2012 plan if MATS is modified in a manner that materially affects Big Rivers’ compliance plan prior to completion of Projects 6, 8, 9, 10 or 11.
The commission had not acted on the stipulated agreement as of mid-day on Aug. 24.