Sherco 3 coal unit expected back in early 2013

The coal-fired Sherburne County (Sherco) Unit 3, down since November 2011 after an equipment failure, should be back up again around the end of the first quarter of 2013, said plant co-owner Southern Minnesota Municipal Power Agency (SMMPA).

On Sept. 11 the agency filed an update with the Minnesota Public Utilities Commission on its last integrated resource plan from 2009. Sherco was a key part of that plan.

SMMPA co-owns (41% share) the 884-MW Sherco 3 with Xcel Energy (NYSE: XEL). On Nov. 19, 2011, during routine restart testing following a planned overhaul, Sherco 3 experienced significant turbine generator vibration and failure.

“Significant progress has been made in assessing the extent of the damage and determining the repair/replace scope of work as well as implementation plans and schedules for restoration activities of the various components affected by the event,” SMMPA wrote. “Based upon the progress to-date and the remaining restoration activities and schedule, the target return of the unit to service is the end of the first quarter of 2013. When the unit failure occurred, SMMPA marketing staff with the assistance of The Energy Authority (TEA) – SMMPA’s contractual representative in the MISO markets – immediately began securing replacement power. SMMPA secured replacement power for the balance of 2011, 2012, and into the first quarter of 2013.”

SMMPA has historically rounded out its supply portfolio with bilateral and market purchases where appropriate, the agency noted. That market strategy, when coupled with the significant market presence of TEA, paid dividends in quickly sourcing replacement power for Sherco 3, SMMPA said. “It is also confirmation of the importance of maintaining purchases as a component of our supply portfolio,” it added. “Low natural gas prices have resulted in relatively low MISO market clearing prices, and being prepared to lock-in significant replacement power quickly mitigated what could have otherwise been significant cost impacts.”

The Sherco 3 outage has caused some collateral damage, with Westmoreland Coal (NASDAQ: WLB) reporting earlier this year that it might lose 3.1 million tons of coal sales this year out of its Absaloka mine in Montana due to the outage.

Agency said it is current on renewable energy and conservation needs

SMMPA pointed out in the Sept. 11 filing that in the meantime it has met all Renewable Energy Objective/Renewable Energy Standard compliance requirements. With existing renewable energy production and Renewable Energy Certificate (REC) banking requirements, SMMPA anticipates sufficient RECs to be in compliance with RES requirements through 2021. SMMPA also reported to the commission that it has met or exceeded Conservation Improvement Program (CIP) requirements in 2009, 2010 and 2011.

Among the agency’s recent developments:

  • After a lengthy permitting process, SMMPA’s 1.6-MW landfill gas generation facility (located near Mora, Minn.) was commissioned in April and is now registered with the Midwest Renewable Energy Tracking System.
  • SMMPA has acquired and redeveloped the former Fairmont Utilities generation site in Minnesota and secured the necessary permits for the construction of a 24-MW spark-ignited natural gas generation facility. Construction is underway, and engines and generators are in production in Germany. The plant is expected to be operational by the end of 2013.
  • SMMPA has contracted for three additional member-owned and operated Quick Start Diesel generators totaling 6 MW from North Branch. The city of Litchfield has expressed an interest in an additional 10 MW of Quick Start generation, however no official decision has been made as of yet. Currently this additional 10 MW of generation is shown in the agency’s short range plan as MISO Purchased Capacity.

A historic component of SMMPA’s resource strategy has been capacity purchase agreements with its members. To ensure that this capacity remains viable, SMMPA said it is investing in equipment to ensure that member resources under contract to SMMPA remain complaint with new requirements under the National Emission Standards for Hazardous Air Pollutants (NESHAP) – Reciprocating Internal Combustion Engine (RICE) Rules.

At the time of the 2009 IRP, SMMPA was still operating under the MAPP Capacity Planning structure. Subsequently, SMMPA has been working with MISO in establishing capacity requirements. SMMPA said it anticipates having adequate capacity through the 2016 period.

The agency said it is considering various possibilities right now to include in its 2013 IRP filing. Those resources include:

  • a spark ignited natural gas plant similar to the one under construction in Fairmont;
  • a share of ownership in an unnamed combined cycle plant in Wisconsin;
  • a traditional power purchase deal with an unnamed peaking plant in Minnesota; and
  • a share of ownership in an unnamed nuclear unit in the Midwest.
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.