The Illinois Pollution Control Board on Sept. 20 granted the Ameren Energy Resources (AER) unit of Ameren (NYSE: AEE) a break that allows it to slow walk a scrubber retrofit project at its coal-fired Newton power plant while complying with a state emissions program through other means.
AER had sought a variance from the SO2 emission rate under the state’s multi-pollutant standard (MPS) rules applicable to the AER MPS Group of facilities in Illinois. The AER MPS Group includes seven coal-fired plants: Coffeen, Duck Creek, E.D. Edwards, Joppa, Hutsonville, Meredosia and Newton.
AER’s variance petition sought relief for five years beginning Jan. 1, 2015, and ending Dec. 31, 2019, and relief under a different part of the MPS for three years and fifteen days, beginning Jan. 1, 2017, and ending Jan. 15, 2020.
On July 23, the Illinois Environmental Protection Agency filed its “Recommendation” in response to the petition stating it “neither supports nor objects” to the board granting the petition. IEPA determined that no environmental harm would result if the board were to grant a variance requiring compliance with an overall annual SO2 emission rate of 0.35 lb/mmBtu from 2013 through 2019, considering that AER has already ceased operation of the Meredosia and Hutsonville stations.
The board in its Sept. 20 decision noted that it received 2,023 public comments in favor of granting the petition, and 1,072 comments opposed, including several spoken at hearing and many written.
The board found that requiring AER to comply with the existing MPS deadlines would impose an arbitrary or unreasonable hardship. Also, the board found that the requested variance will result in an overall reduction in emissions and therefore has no significant negative impact on the public or the environment. The board also found that the requested variance is consistent with federal law.
Ameren needed delay for several reasons, some financial
In its petition, AER said that among other things, declining power market prices have resulted in an insufficient cash flow necessary to finance and maintain the construction completion schedule of flue gas desulfurization (FGD) equipment at the Newton plant in time to meet those rates. By seeking relief now, which is critical from a timing standpoint, AER said it will conserve cash flow and stave off “draconian” operational measures with the hope that stability will eventually return to the marketplace thereby allowing the completion of the Newton FGD project.
To meet the current overall SO2 annual emission rates for 2015 and 2016, and for 2017 and beyond, AER planned to install FGD at the Newton station. If the variance was not granted, AER claims that it will need to mothball multiple units across its coal fleet, which may include E.D. Edwards, Joppa, and/or Newton units, so as to comply with the MPS overall SO2 annual emission rates while the Newton scrubber project was delayed.
AER stated it has complied with mercury and NOx requirements in the MPS.
In its initial petition, AER proposed that the AER MPS Group will meet an overall SO2 annual emission rate of 0.38 lb/mmBtu from 2012 through 2019. AER anticipates achieving this rate by continuing to not operate at the Hutsonville and Meredosia stations and “maximizing FGD performance” at Duck Creek and Coffeen. AER will continue to burn low-sulfur coal from the Powder River Basin at the five operating stations.
Ameren did slight plan revision during board review
In its response to questions from the board, AER said that it has revised its proposed compliance plan. AER proposes to return to compliance with the 2015 overall SO2 annual emission rate on Jan. 1, 2020, and with the 2017 overall SO2 annual rate by Jan. 15, 2020.
In addition, AER proposed during the proceeding to meet an overall SO2 annual emission rate of 0.35 lb/mmBtu from 2013 through 2019, lowered from 0.38 lb/mmBtu. AER will meet this revised rate by not operating the Hutsonville and Meredosia stations during the variance term. AER will also operate FGD systems at the Duck Creek and Coffeen stations at a higher level of control. Specifically, AER will operate the FGD systems at a 98%-99% SO2 removal rate rather than 95% which will also require “auxiliary power, the increased sizing of equipment, and increased limestone usage.” AER estimates that capital expenditures to operate Duck Creek and Coffeen FGD systems at 98%-99% will be $5m in capital costs and $173,337 in annual operating and management costs. AER also intends to procure lower-sulfur coal for its operations.
AER asserted that, by taking these steps, it will achieve an emission rate of 0.35 lb/mmBtu. AER contended that this compliance plan “provides a net environmental benefit with respect to SO2 emissions.”
AER expects to continue construction at Newton to complete the FGD project. AER told the board it has procured “all major equipment components” needed for the project. AER “expects to continue” site preparation, foundation work, and duct work fabrication “over the next few years.” Field construction “could take approximately 24 months to complete once the project ramps back up.” Extending site preparation and construction over several years will position AER for compliance with the 2015 SO2 annual emission rate by Jan. 1, 2020. AER has incurred $237m in the Newton FGD project to date. By the end of 2012, AER will have spent over 50% of the project cost.
In response to questions from the board, AER provided more detail on the construction plans for the Newton FGD. AER has scheduled construction work during 2012 and 2013. During this time, all major equipment will be delivered to the site and rough set; AER will also fabricate ductwork and construct the absorber building. Engineering design is 65% complete and will be completed in 2014. AER has budgeted $16m per year from 2013 to 2016 and greatly increased capital spend in 2018 and 2019 to complete the Newton FGD project.