The Kentucky Public Service Commission has accepted a settlement regarding a proposed environmental compliance plan that includes fewer-than-expected coal-fired emissions projects by Big Rivers Electric Corp.
Under the settlement, Big Rivers will not construct the most costly emission control projects proposed in its original plan, thus reducing the total cost by about 80%, the PSC noted in an Oct. 1 statement. The modified plan will cost $58.5m, which is $225m less than Big Rivers originally proposed.
Most of the changes in the environmental compliance plan are the result of an Aug. 21 federal court decision that struck down the Cross-State Air Pollution Rule (CSAPR) issued by the U.S. Environmental Protection Agency. The dropped projects were intended to comply with those regulations. Because the federal court ordered the EPA to produce new regulations to address the same types of emissions, electric utilities such as Big Rivers may be required to install additional controls in the future, the commission noted.
The federal court decision came a day before the Aug. 22 start of the formal evidentiary hearing on the Big Rivers application. The hearing was suspended for a day while the parties negotiated the settlement. In addition to Big Rivers, the parties to the settlement are the Kentucky Office of Attorney General, representing ratepayers in general; Kentucky Industrial Utility Customers, representing large industrial consumers; Kenergy Corp.; and the Sierra Club.
Big Rivers is owned by and provides wholesale power to three rural electric distribution cooperatives: Jackson Purchase Energy Corp., Kenergy and Meade County Rural Electric Cooperative Corp. Together, the three cooperatives serve 112,000 customers in 22 counties in western Kentucky.
Big Rivers had proposed new or upgraded pollution control systems at its coal-fired Coleman, Wilson, Green and Reid plants. Nearly half the cost of the original plan was for an SO2 scrubber and associated facilities at the Wilson plant. Big Rivers also proposed to complete the conversion of the Reid plant to burn natural gas instead of coal, at a cost of $1.2m.
The settlement agreement removes the two most expensive projects – the $139m scrubber at Wilson and an $81m selective catalytic reduction system for NOx control at Green – while retaining smaller projects to control mercury and particulates at Coleman, Wilson and Green. It also includes the coal-to-gas conversion at Reid.
The commission granted Big Rivers the Certificates of Public Convenience and Necessity (CPCNs) needed to permit the construction of Project 6, which is the conversion of Reid Unit 1 to gas by January 2014, and Projects 8, 9 and 10, which are activated carbon injection, dry sorbent injection and continuous emissions monitors at Coleman, Wilson and Green. The commission also found that Project 11, continuous emissions monitors at HMP&L Station Two Units 1 and 2, do not require a CPCN because the plant is owned by a party outside of PSC jurisdiction.
Before incurring any costs associated with Projects 8, 9 and 10, except those relating to testing, Big Rivers will perform testing, while injecting activated carbon and dry sorbent, to ensure that these projects will achieve compliance with all applicable Mercury and Air Toxics Standards (MATS) particulate limits at Coleman Units 1-3, Wilson Unit 1 and Green Units 1-2, and will not necessitate electrostatic precipitator (ESP) upgrades or the addition of other particulat controls at Coleman Units 1-3, Wilson Unit 1, and Green Units 1-2. If this testing demonstrates that the projects will not achieve compliance with any applicable MATS particulate limit at any unit or will necessitate ESP upgrades or the addition of other particulate controls, Big Rivers will not proceed with the respective MATS project for that unit, but will seek an amendment to its environmental compliance plan that will ensure compliance with all applicable MATS particulate limits.
Big Rivers owns and operates the following coal stations: Coleman (consisting of three units with a total output of 485 MW); Wilson (one unit with an output of 440 MW); Green (consisting of units with a total of 496 MW); two Henderson Municipal Power & Light (HMP&L) units totaling 337 MW; and one Reid unit with an output of 72 MW. HMP&L Units 1 and 2, also known as Station Two, are owned by the city of Henderson, Ky., and operated by Big Rivers. Under a power sales contract, Big Rivers, among other things, pays a proportionate share of all expenses in return for a proportionate share of Station Two’s electrical output.