Arkansas Electric Cooperative still believes that a new flue gas desulfurization (FGD) installation on the coal-fired Flint Creek power plant, which it co-owns with Southwestern Electric Power (SWEPCO), is the least-cost and most secure option for the future, said cooperative official Forest Kessinger.
Arkansas Electric (AECC) on Oct. 29 filed with the commission supplemental testimony in an ongoing proceeding where it and SWEPCO, a unit of American Electric Power (NYSE: AEP), are seeking Arkansas Public Service Commission approval for the FGD project. On Oct. 12, the commission issued an order directing AECC to file the following information:
- projected retail base rate revenue requirements for the first full year of operation for the FGD;
- estimated monthly retail bill impact, calculated with and without fuel for a residential customer using 1,000 kWh; and
- the estimated monthly bill impacts on other major rate classes.
AECC’s cost scenarios as covered under the Kessinger testimony are:
- a Flint Creek retrofit with selective catalytic reduction (SCR) in 2016;
- a Flint Creek retrofit without SCR in 2016;
- a new 250-MW 2×1 combined cycle natural gas fired plant at the Flint Creek location with a one year write-off of the remaining Flint Creek net-plant-in-service;
- a new 250 MW 2×1 combined cycle natural gas fired plant at the Flint Creek location with a ten year write-off of any remaining Flint Creek net-plant-in-service; and
- converting Flint Creek to a natural gas-fired plant with wind added in 2020.
Parties to this case have argued that a new gas-fired plant may be a cheaper way to go than retrofitting new emissions controls on an aging coal plant.
Need for SCR installation is something of a moving target
In AECC’s previous testimony, the cooperative assumed that SCR would be installed in 2016. AEP/SWEPCO’s testimony and economic studies do not assume that SCR is necessary in 2016. In addition, the results of a five-factor Best Available Retrofit Technology (BART) analysis presented by AEP/SWEPCO at the hearing in this case indicates that SCR will not be necessary in 2016, Kessinger noted. For purposes of consistency between AECC and AEP/SWEPCO, and in recognition that SCR will likely not be required in 2016, AECC provided a scenario which assumes that SCR will likely not be necessary in 2016.
Unless AECC receives an order from the commission allowing AECC to collect the remaining net-plant-in-service over an extended period of time, AECC must write-off any remaining net plant-in-service at the time of abandonment. A one year write-off without collection will flow directly into AECC’s income statement and result in a reduction to its members’ equity equal to the write-off, Kessinger noted. If, however, the commission approves an AECC request to recover the write-off through rates, over an extended period of time, that immediate reduction to members’ equity will not occur.
“When fuel costs are considered, the Flint Creek retrofit remains AECC’s lowest cost option,” Kessinger wrote. “In addition, the retrofit provides AECC with the best fuel reliability, maintains AECC’s fuel diversity, uses a fuel that is less susceptible to fuel price volatility, and maintains base load generation in an area that has transmission constraints.”
Sandra Bennett, SWEPCO’s Vice President, Regulatory and Finance, filed Oct. 29 supplemental testimony on the rate impacts that the commission requested in the Oct. 12 order. Shawnna Jones, a Regulatory Consultant in the Regulated Pricing and Analysis Department, part of the American Electric Power Service Corp. Regulatory Services Department, also provided Oct. 29 testimony on the subject.
SWEPCO on Feb. 8 asked the Arkansas commission for a declaratory order approving installation of $408.7m worth of emissions controls on Flint Creek. The planned controls include: dry FGD equipment for SO2 control; activated carbon injection (ACI) for mercury; and Low NOx burners and over-fired air facilities for NOx control. The DFGD system selected by the project engineers will also include a pulse jet fabric filter, commonly called a baghouse.
SWEPCO has been planning, pending regulatory approvals, on commencing site construction activities on or about Jan. 1, 2014. This schedule will permit construction of the facilities to be completed and placed in service by June 30, 2016. This schedule would require that Flint Creek be taken out of service for approximately three months, because compliance with the the U.S. Environmental Protection Agency’s new Mercury and Air Toxics Standards (MATS) is required by the first quarter of 2016 and the plant cannot continue to operate until compliance is achieved.
Flint Creek is a single-unit, pulverized coal plant with a net capacity of 528 MW and was placed in service in 1978. SWEPCO’s ownership portion of this unit is 264 MW net, and it is responsible for operating and maintaining the plant.