Nova Scotia Power said Aug. 28 that it has completed filing expert evidence, along with its own reply evidence, to refute allegations the Liberty Consulting Group has made in its 2012 Fuel Adjustment Mechanism (FAM) report.
The expert evidence filed Aug. 28 with the provincial Utility and Review Board (UARB) covers the topics of: professional audit standards, human resourcing, natural gas purchases, natural gas hedging, the National Energy Board’s regulation of natural gas and lowered efficiency at the Lingan power plant in late 2010 due to wet coal.
In its reply evidence, NS Power contends the Liberty report is fundamentally flawed, and that the UARB should reject its conclusions and recommendations. Further, NS Power asks the board to revise the FAM Plan of Administration to bring greater discipline and clarity to its audit provisions. The proposed changes would ensure that power customers, NS Power and the board benefit from a constructive and efficient review of NS Power’s fuel procurement and FAM compliance, the utility said. In October, the Board will hear the evidence and arguments on the validity of Liberty’s report.
NS Power’s response on the Lingan wet coal issue was prepared by Emily Medine of U.S.-based consulting firm Energy Ventures Analysis. Among other things, Medine contended that material areas of the FAM audit were not conducted by individuals that have sufficient expertise and relevant experience and that the audit report was not objective and did not have a balanced tone. Medine said Liberty’s proposed disallowance for the derate at Lingan in December 2010 is without merit.
“NSPI could not anticipate a 30-year rainfall and knowingly and with the endorsement of Liberty and others regularly sought to minimize fuel costs through blending and the use of non-specification coals,” said the NS Power summary of Medine’s remarks. “Any ‘cost’ associated with this derate is more than offset by the hundreds of million dollars of savings NSPI has realized for its customers in pursuing the least cost fuels.”
In December 2010, the Lingan unit experienced a 21% derate versus forecast generation. Liberty concluded in its audit that the company failed to act in a reasonable manner by acquiring coal that would not cause the opacity problems that Liberty said was the cause of the derate and therefore the incremental generation costs associated with derate should not be recoverable through the FAM.
Sides argue over presence, or lack of it, of Pittsburgh-seam coal
Medine noted in a redacted version of her Aug. 28 testimony that Liberty contends NS Power should have had more Pittsburgh-seam coal out of Northern Appalachia on hand to deal with the opacity problem. “In my experience, it is not always easy or quick to identify the bad actor for a plant operating problem,” Medine wrote. “Clearly, fuel is looked to first but it is not always the explanation. In a blend, such as was being used at Lingan, there are multiple coals and coal qualities to consider. Diagnostics often take time. Based upon the facts, i.e., the problem at Lingan disappeared before the Pittsburgh seam coal was even consumed, NSPI’s failure to have Pittsburgh seam coal on hand was not the source of the problem.”
Medine also contended: “Liberty is speculating on what actually caused the derate. Regardless of the initial reporting to the Board that the derate was opacity related, NSPI has subsequently determined that the heavy rainfall was the primary culprit. Further, despite Liberty’s representations that NSPI was caught unprepared, NSPI has been fully aware of potential derates related to opacity at its units as it complies with provincial environmental requirements by burning low sulphur coal. This problem has already necessitated the addition of a baghouse at Trenton 5. Planning has been underway by NSPI for years in how to address this problem in the lowest cost manner.”
NSPI has a history of seeking to use the lowest cost fuel in each of its plants, Medine added. All of NSPI’s plants were designed for local coals. More than a decade ago, NSPI stopped using local coals because of the closure of the Devco mines. Since that time, NSPI has sought to minimize fuel costs within the operating constraints of the power plants. This includes the use of petroleum coke at Lingan, Trenton and Tupper. It also includes Colombian and Venezuelan low-sulfur bituminous coals. Also in the mix are U.S. bituminous coals from Central Appalachia, Northern Appalachia, the Illinois Basin, and the Rockies and sub-bituminous coal from the Powder River Basin. Also included is the use of some local strip-mined coals.
“Some of these coals have worked better than others,” Medine added. “While no coals are purchased from untested coal basins without test burns, NSPI (like other generators) has occasionally run into subsequent operating problems. There is no question that this strategy of supply diversification and cost minimization has led to enormous financial benefits for NSPI customers over this period which would not have been realized had NSPI always limited itself to plant design specifications.”
The four plants at NS Power that are mostly coal-fired are:
- the four-unit Lingan plant, 620 MW;
- Point Aconi, 171 MW, a circulating fluidized bed combustion facility;
- Point Tupper, 154 MW; and
- the two-unit Trenton plant, 307 MW.