American Electric Power (NYSE: AEP) is working on issues right now related to the planned retirement of around 5,000 MW of coal-fired generation, and at the same time looking to achieve first fire on coal the week of Oct. 15 at its new, 600-MW Turk coal plant in Arkansas.
AEP Executive Vice President for Generation Mark McCullough outlined some of the issues facing the AEP coal fleet during an Oct. 16 speech at the marcus evans Power Plant Management Summit in the Chicago area.
Turk is an ultra-supercritical pulverized coal plant that recently started up on natural gas and is about to fire its first coal as the plant works toward full operation later this year, McCullough said. Plans for the plant were first laid out in 2006, and things have gone so badly for coal-fired generation since then that the decision whether to build the plant might have been very different it had been made now, he said.
One sign of how coal is in trouble is that currently AEP’s Southwestern Electric Power unit is before the Arkansas Public Service Commission for approval to build a scrubber on the existing Flint Creek coal plant, and commission staff is saying it might be better to just shut the plant and replace it with gas-fired capacity instead, McCullough said. The 528-MW Flint Creek plant burns Powder River Basin coal with a very cheap cost of about $1.50/mmBtu, so the gas threat there is particularly remarkable, he said. AEP co-owns Flint Creek with Arkansas Electric Cooperative.
To show how gas has eaten into coal usage, McCullough said that in 2011 at an average gas cost of $4.30/mmBtu, AEP burned 67 million tons of coal. This year, at a projected average of $3/mmBtu for gas, the coal burn may be only 57 million tons.
There is about 5,000 MW of coal capacity that AEP had at one point mostly planned to retire late this decade, but those retirements have been moved up to around April 2015 to meet the compliance deadline for the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards. Those targeted units are at plants like Kanawha River, Sporn and Muskingum River. McCullough noted that Conesville Unit 3 is due for retirement at the end of this year.
On the retirement list is the 278-MW Big Sandy Unit 1 in eastern Kentucky. The fate of the larger, 800-MW Unit 2 at Big Sandy is still uncertain, McCullough told GenerationHub. In May, AEP’s Kentucky Power subsidiary withdrew a request at the Kentucky Public Service Commission for permission to install a scrubber on Unit 2 so it could rework the economics of the project. A scrubber project is still a viable option for that plant, with a decision needed fairly soon on whether to scrub or shut the unit due to a federal consent decree that has a set time for the unit’s emissions to be cleaned up or eliminated, he said.
In a consent decree it worked out with EPA in 2007 covering coal plants in five eastern states, AEP agreed in part to install scrubber equipment on Big Sandy Unit 2 by the end of 2015.