Georgia Power’s crystal ball sees less coal in its (cleaner) future

Georgia Power, in a new Integrated Resource Plan (IRP) filed Jan. 31 at the Georgia Public Service Commission, laid out a future that is less dependent on coal-generation and weighted heavily toward new nuclear, natural gas and renewable capacity.

“The Company is in the midst of a significant transition in its fleet that will result in a more diverse fuel portfolio and ensure that Georgia Power is able to continue to provide its customers with reliable and affordable electricity while helping to mitigate the risk of fuel price volatility,” said the IRP for this Southern Co. (NYSE: SO) subsidiary. “This period of transition will also result in a younger, more efficient fleet and one with fewer coal resources, which may lessen customers’ exposure to the cost of potential carbon regulation or legislation.

The IRP continued: “Additionally, by further controlling the Company’s largest and most efficient coal units (units in which the Company has already invested significant capital costs for environmental controls), the Company retains the significant energy benefits of these units while also positioning itself to be able to respond to future increases or volatility in the cost of natural gas. And by moving forward with switching primary fuels at Plant McIntosh Unit 1, Plant Yates Units 6 and 7 and Plant Gaston Units 1-4, the Company is able to retain the operational and economic benefits of these units for customers.  Finally, by deferring a final decision regarding the conversion of Plant Mitchell Unit 3, the Company maintains the option of cost-effectively converting an existing unit to a renewable biomass generating unit in its future resource plans.”

In summary, the utility in part seeks commission approval of the:

  • Decertification of Branch Units 3-4, Yates Units 1-5 and McManus Units 1-2 effective by the Mercury and Air Toxics Standards (MATS) compliance date of April 16, 2015, decertification of Kraft Units 1-4 one year past the MATS compliance date (by April 16, 2016), decertification of Boulevard Units 2-3 effective as of the date of the final order in this proceeding, and approval of expedited decertification of Bowen Unit 6 by April 16, 2013;
  • A switch to natural gas as the primary fuel for Yates Units 6-7 and Gaston Units 1-4; and
  • An amendment of the decertification date specified in the commission’s final order in a prior docket for Branch Unit 1 from Dec. 31, 2013, to coincide with the decertification of Branch Units 3-4.

Georgia Power has 149 company-owned generating units (36 fossil steam, 71 hydroelectric, four nuclear, five combined cycles (CCs), and 33 combustion turbines (CTs), excluding four CTs which are not permitted for normal summer operation, that provide approximately 17,400 MW of retail peak season generating capacity. Of the energy from company-owned units for the first 11 months of 2012, 42% is from coal, 18% from nuclear, 4% from hydroelectric and 36% from natural gas and oil.

Georgia PSC has already approved some coal shutdowns

Normally, Georgia Power files a full IRP with the commission every three years, with updates filed as needed. The need to file the company’s 2011 IRP update was driven largely by the significant amount of uncertainty created by numerous new environmental regulations then, and to a certain extent still, under development by the EPA. The most significant of these regulations, with the most immediate effect, was the EPA’s MATS rule. As a result, the company recommended, and the commission approved, numerous actions that sought to mitigate the impact of these environmental rules and minimize costs for customers. These included:

  • Initial work necessary on seven baghouses to meet the MATS compliance deadline for the affected units at Bowen, Hammond and Wansley. 
  • Decertification of Branch Units 1-2 effective on the Georgia Multipollutant Rule compliance dates of Dec. 31, 2013, and Oct. 1, 2013, respectively, and Plant Mitchell Unit 4C effective as of the date of the commission’s final order on March 26, 2012.
  • Certification of the following three power purchase agreements (PPAs) with Southern Power Co. from natural gas-fired facilities—Harris (625 MW), West Georgia (298 MW) and Dahlberg (75 MW). The Dahlberg and West Georgia agreements commence Jan. 1, 2015, and the Harris agreement commences June 1, 2015. All three PPAs end on May 31, 2030. 

The company after that March 2012 approval continued its analysis of the final MATS rule and in this Jan. 31 filing has proposed for the commission’s consideration a final MATS compliance plan.

Changes in final MATS rule altered Georgia Power’s plans

The final MATS rule contained differences from the proposed rule that allowed the company to remove five baghouses from its compliance strategy. “Chief among these differences was a change in the particulate matter standard between the proposed and final rules,” the Jan. 31 IRP said. “In the proposed rule, the EPA would have imposed a very stringent and complicated limit on particulate emissions that ultimately would have resulted in a unit-specific limit on particulate matter emissions, thereby removing all compliance margin without accounting for natural variation in the operation of a generating unit. Therefore, the only option for compliance under the proposed rule would have been installation of baghouses to attempt to comply under all operating conditions. In the final rule, however, the EPA altered the form of the particulate matter limit such that, while still very stringent, it is a standard limit across all units instead of a unit-specific limit. The limit also is in a form that allows for additional compliance options to be considered and evaluated on a unit-specific basis….”

Aside from Bowen Units 1-4, Wansley Units 1-2 and Hammond Units 1-4, and the coal-fired units for which the company seeks decertification, additional environmental controls will be required for the remaining coal units to operate on coal after the MATS compliance date of April 16, 2015. Specifically, Georgia Power said it plans to utilize a bromine additive at Scherer and switch McIntosh Unit 1 to operate on lower-priced Powder River Basin coal (pending a successful test burn and further study). These actions will ensure coal-fired generation remains a cost-effective and reliable part of the fleet, maintaining essential fuel diversity. 

For the remaining coal-fired units that will continue to operate, the company has concluded that it is not cost-effective to install the environmental controls necessary to enable these units to remain operational on coal. Instead, it has found it to be most cost-effective to switch Yates Units 6-7 and Gaston Units 1-4 to natural gas as the primary fuel, with coal used as a backup fuel.  

The units for which the company has made such a determination and seeks decertification in the 2013 decertification application are Branch Units 3-4, Kraft Units 1-4, McManus Units 1-2 and Yates Units 1-5. “These difficult decisions are driven by unfavorable economics, primarily resulting from the scope and cost of environmental controls and limitations required for MATS compliance,” the utility noted. “In addition, … the Company is requesting decertification of Plant Boulevard Units 2 and 3 effective as of the date of the final order in this proceeding and expedited decertification of Plant Bowen Unit 6 by April 16, 2013.”

Utility tried to juggle differing needs for Branch units

The decision to decertify Branch Units 3-4 presented additional challenges that required consideration, Georgia Power pointed out. Units 3-4 are coal-fired supercritical units capable of an output of 1,016 MW. Supercritical steam units require a source of steam to assist with the startup of the unit. As the decision to retire Units 3-4 became evident, the company determined that utilizing Branch Unit 1 to provide a source of startup steam for Units 3-4 would be more cost effective than purchasing and installing an auxiliary boiler on the site for the short period until these units are decertified.

However, as currently drafted, the Georgia Multipollutant Rule requires installation of selective catalytic reduction (SCR) and SO2 scrubber on Branch Unit 1 by Dec. 31, 2013, the current commission-approved decertification date. To allow for a short-term extension of the Unit 1 Multipollutant Rule compliance date to allow Unit 1 to provide startup steam for Units 3-4, the Georgia Environmental Protection Division (EPD) has begun a process to revise the rule.

That revision is intended to align the Multipollutant Rule compliance date for Unit 1 with the date required in the MATS rule, namely April 16, 2015. As part of this revision, the EPD will accelerate the requirement to install controls on Units 3-4 from the end of 2015 to April 16, 2015, aligning the compliance dates for those units with the MATS rule as well. Therefore, the company is requesting an amendment to the decertification date specified in the PSC’s final order in a prior docket for Branch Unit 1 from Dec. 31, 2013, to coincide with the decertification of Branch Units 3-4 by April 16, 2015. This change, if approved by the commission and the EPD, will provide the most cost-effective method to ensure reliable startup of Branch Units 3-4 until their retirement.

Additionally, although the long-term decision is to retire Kraft Units 1-4, a one-year MATS extension will be requested from the EPD to ensure reliability while necessary transmission improvements in the area are completed, Georgia Power noted.

Mitchell Unit 3 biomass conversion still on hold

The utility said it continues to evaluate the economic benefit to customers of the Mitchell Unit 3 coal-to-biomass conversion. The company is currently conducting a thorough evaluation of the impacts of the final U.S. Environmental Protection Agency Industrial Boiler Maximum Achievable Control Technology standard (IB MACT) that was released in late December. In this 2013 IRP, Mitchell Unit 3 is assumed to be unavailable in 2015 and 2016 and then available as a biomass unit in 2017.

Here is an outline of some of the targeted units:

  • Branch Units 3-4 are fired with coal, have a total capacity of 509 MW and 507 MW, respectively, and were placed in service in 1968 and 1969, respectively.
  • Kraft Units 1-4 are coal-fired units that were placed in service at various times between 1958 and 1971 and have a total capacity of 316 MW.
  • McManus Units 1-2 are oil-fired steam facilities that went into service in 1952 and 1959, respectively, and have 43 MW and 79 MW of capacity, respectively.
  • Yates Units 1–5 are coal-fired units that were placed into service at various times between 1950 and 1958 and have 579 MW of total capacity.
  • Boulevard Units 2-3 are oil-fired combustion turbines (CT) rated at a capacity of 14 MW each, and were installed in 1970 along with Unit 1. Both units recently experienced a significant equipment failure and the company’s economic analysis demonstrates that the repairs are not in customers’ best interest. Boulevard Unit 1 is not damaged, remains cost-effective, and is recommended for continued operation.
  • Bowen Unit 6 is a 32-MW oil-fired CT that is only permitted to operate during non-summer months due to ozone nonattainment requirements in the area.
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.