The recent decision by Dominion Resources (NYSE: D) to shut the Kewaunee nuclear plant in Wisconsin in 2013 may lend support to the long-term need for the coal-fired Weston Unit 3, with the future of that unit dependent on $288m of new emissions controls.
That was one of the points made by Kenneth Detmer, who works in the Gas and Energy Division of the Wisconsin Public Service Commission, in Nov. 15 testimony filed at the commission. The testimony came in a case where Wisconsin Public Service Corp. (WPSC) in May applied for a Certificate of Authority to construct and place in operation Multi-Pollutant Control Technology on Weston Unit 3 known as ReACT (Regenerative Activated Coke Technology).
“A large amount of baseload generation is being removed from the electric grid both in Wisconsin and nationally,” Detmer noted. “The recent decision to shut down Kewaunee removes an additional 550 megawatt (MW) of baseload generation from the ATC footprint. Wisconsin investor-owned utilities have announced or considered over [redacted] of coal-fired generation to be retired by 2017. Nationwide, the Brattle Group is forecasting the retirement of up to 77 gigawatts (GW) of coal-fired capacity and with up to 16 GW in the MISO footprint.”
There is currently excess capacity available, but reliability includes more than just capacity, Detmer wrote. MISO has released a Gas and Electric Infrastructure Interdependency Study, which indicates a $2bn cost for new natural pipelines and $950m for lateral lines to connect to new gas-fired generators replacing retiring coal-fired generators. New gas recovery methods are producing large gas supplies, but the delivery infrastructure needs to be built up to meet new needs, Detmer pointed out.
“Natural gas now rivals coal as a source of electric generation,” he added. “For the first nine months of 2012, coal as a generation source has been reduced to less than 37 percent of the energy produced compared to natural gas at over 31 percent.”
But, he pointed out that many gas generators within MISO lack 24 hour, 7 days a week firm gas supply and/or backup fuel oil. In the winter when gas supplies are strained, this could become an issue, he said. Further study not only at MISO but also at FERC is ongoing.
“According to WPSC, the project will help ensure facility operation into the future and provide it with system-wide emission reductions,” Detmer wrote. “As explained in the application, the proposed project will reduce sulfur dioxide (SO2), nitrogen oxide (NOX), and mercury (Hg) emissions for compliance with current and anticipated regulations. With the recent vacatur of the Cross State Air Pollution Rule (CSAPR), the most immediate need for this project has diminished. WPSC’s current planning assumption is that emission reductions comparable to CSAPR will be required when EPA meets its obligation under the Clean Air Act to address the sources that contribute to downwind nonattainment. WPSC also indicated there are several other air rules as well as the pending EPA Notice of Violation (NOV) that must be addressed in order to obtain compliance for Weston 3 along with system-wide emission compliance. WPSC believes, based upon other EPA NOV settlements, that resolution of the EPA NOV would require SO2 and NOX emission reductions on Weston 3.”
Installation of the ReACT system is expected to take almost four years from approval, Detmer reported. In order to meet anticipated regulations and achieve timely emission reductions, WPSC believes it is best to award a System Furnish and Erect Contract in February 2013 to allow project completion by the fourth quarter of 2016.
Also providing Nov. 15 testimony was Julie Urban, Chief Economist in the commission’s Gas and Energy Division. Urban’s testimony was neutral on the WPSC project, but noted: “The age of the Weston 3 plant should also be considered. $288 million is a lot of money to invest in a 30-year old plant. The cost of a new combined-cycle power plant of comparable capacity to Weston 3 with ReACT would be $314 million. This new combined-cycle plant would also be more efficient with a heat rate of 7,050 British thermal units (Btu)/kilowatt-hour (kWh) versus 10,679 Btu/kWh for Weston 3.”
On the other hand, replacing Weston 3 will tip the fuel portfolio of WPSC more heavily towards gas and away from coal, Urban said. “Stricter environmental regulations on coal plants could increase the demand for natural gas,” Urban wrote. “However, there are environmental concerns surrounding fracking and potentially increased regulatory costs could impact supply. With increased demand and decreased supply, the price of natural gas is likely to rise over time.”
Clean Wisconsin claims project is unsupported and unneeded
As might be expected in the case of an environmental group, Nov. 15 testimony from Jeremy Fisher of Synapse Energy Economics, who is working for Clean Wisconsin in this case, came out against the Weston 3 retrofit. “After adjusting for flaws, errors, and biases in the Company’s model, I conclude that implementing ReACT is a net liability, rather than a net benefit to ratepayers,” Fisher wrote. He added that:
- The company should not pursue construction of ReACT in advance of a finalized settlement agreement with the EPA to remedy a notice of violation. Doing so would put ratepayers at significant risk for additional costs not currently considered or disclosed by the company, and would risk creating redundant and unnecessary costs for ratepayers, he added.
- The analysis pursued by the company to justify the economic viability of ReACT is functionally flawed, erroneous and biased against replacement of Weston 3.
- The company failed to examine other, legitimate opportunities to replace the energy and capacity from Weston 3, such as additional energy efficiency or other demand-side management initiatives.
Ranajit (Ron) Sahu, a consulting engineer, also testified Nov. 15 for Clean Wisconsin. One issue Sahu cited was lack of U.S. experience with the technology. “ReACT is a new pollution control technology in the U.S. In fact, Weston Unit 3 would be the very first full-scale application of this technology in any coal-fired (or any other industrial) plant in the U.S. Hamon Research Cottrell (HRC) is the licensee of the technology (from J-Power Entech, Inc.) in the U.S. Details of the licensing agreement are not available in the record. The origins of the technology are in Japan, where it is in use for SO2 removal at two units of the Isogo power plant (Unit 1 since 2002 and Unit 2 since 2009). I am aware that HRC lists a few other coal power plant applications of the technology but these are all prior to 1995 and there is no detail available as to their operational status or whether the type of technology implemented at these older facilities is even comparable to what is proposed at Weston 3. Of all of these HRC only discusses the Takehara unit but notes that the ReACT system implemented here was for NOx control with a target 80% reduction of NOx – far short of the expected 17% or less NOx reduction expected at Weston 3.”
Sahu said that ReACT was pilot tested over a period of roughly five months in 2007 at a 2.58 MW slip-stream of Unit 1 at the North Valmy power plant in Nevada. This testing was conducted as part of a research project sponsored by a consortium of utilities, including WPSC, the Electric Power Research Institute (EPRI) and others. Other U.S. utilities sponsoring the testing at North Valmy included Nevada Power (Sierra Pacific Power, the host site), Ameren, Consumers Energy, MidAmerican Energy and Salt River Project. The sponsoring entities and their subsidiaries operate over 50 coal-fired units in the U.S. “To the best of my knowledge, none of the other power plants operated by the sponsoring entities at North Valmy (or any other of the roughly 1,050 coal-fired power plant units in the U.S.) are proposing or have proposed to use ReACT for reduction of SO2, NOx, or mercury emissions,” Sahu added. “HRC, the sole licensee of ReACT in the U.S. has not announced any other projects at U.S. coal-fired utilities as of this writing.”
Sahu also cited regulatory uncertainty, pointing out that CSAPR has been vacated by a federal appeals court and the potential NOV settlement by the utility with EPA is still unknown. There are also other unknowns related to Best Available Control Technology and National Ambient Air Quality Standards requirements, Sahu added.
Utility said this project the best option for Weston 3
WPSC applied May 7 at the commission for this project on the coal-fired, 321-MW Unit 3 at Weston. The Weston plant is located in Marathon County, about 7 miles south of Wausau. The site currently has four coal units, two gas/oil-fired combustion turbine generators, and auxiliary equipment such as substations and fuel supply systems. Weston Unit 3 is WPS’s second newest and second largest coal-fired facility. The unit went into service in 1981, has a heat rating of 3,423.48 mmBtu/hr and burns primarily Powder River Basin (PRB) coal.
Of all of the units in WPS’s fleet, Weston Unit 3 is the first choice to install additional controls. Pulliam Units 5-8 and Weston 1-2 are older, smaller and less efficient units than Weston 3. Installation of the ReACT technology at Weston 3 would free up annual SO2, annual NOx, and ozone season NOx allowances that WPS said it could use for compliance at other units.
WPS, a subsidiary of Integrys Energy Group (NYSE: TEG), said in a May 7 announcement that it expects, based on historical data, the project will reduce plant SO2 emissions by more than 90%, mercury by 90% or more, and NOx by more than 20%.
“We’ve decided to upgrade Weston 3 (W3) to ensure its viability as an electric generator in a climate of future uncertainty regarding environmental regulations,” said Howard Giesler, Weston General Manager, in the May 7 announcement. “Adding this new, but proven, technology will position the unit to be in compliance with future EPA regulations, while enabling the production of safe, clean, reliable and economical electricity.”