Kentucky PSC approves new SO2 scrubber for Mill Creek Unit 3

The Kentucky Public Service Commission on Feb. 15 approved a Louisville Gas and Electric (LG&E) request to modify its plans to add SO2 emissions control equipment at the coal-fired Mill Creek power plant.

The commission in December 2011 had approved an environmental compliance plan for LG&E that included an upgrade of the existing west flue gas desulfurization (WFGD) equipment on Mill Creek Unit 4, with that WFGD then re-purposed to cover emissions from Unit 3. Then in October 2012, LG&E filed an application to modify the Certificate of Public Convenience and Necessity (CPCN) previously granted by the commission to allow for a new WFGD to be built at Unit 3, since the old WFGD is now considered too expensive to fix.

That CPCN orginally authorized the construction of certain environmental projects that were contained in LG&E’s 2011 Environmental Compliance Plan, including environmental equipment at Mill Creek. LG&E’s 2011 plan was also approved in another case covering projects eligible for recovery by LG&E under its Environmental Cost Recovery (ECR) surcharge.

In the 2011 order, the commission granted certificates for LG&E to:

  • build two WFGD units (one to serve both Mill Creek Units 1 and 2, another to serve Mill Creek Unit 4); and
  • to tie Mill Creek 3 into the existing (but rehabilitated) Mill Creek Unit 4 WFGD, and then to remove the existing WFGDs on Mill Creek Units 1, 2, and 3.

Located in southwest Jefferson County, Mill Creek began commercial operation in 1972. The plant’s net summer capacity is 1,472 MW. All four units are fully scrubbed and the plant normally burns about 5 million tons of coal annually.

LG&E initially requested that the commission issue an order in this plan revision case by Jan. 18 to allow LG&E time to complete the new Unit 3 WFGD by April 2016, which is the deadline for compliance with the federal Mercury and Air Toxics Standard (MATS), assuming a one-year extension is granted to the initial April 2015 compliance deadline. LG&E subsequently stated that it was able to negotiate with its equipment supplier and construction contractor to extend their firm pricing until late February, so that a decision in this case by Feb. 15 would allow LG&E to lock in those prices and still complete the new WFGD at Mill Creek Unit 3 by April 2016.

The basis for LG&E’s request for a modification of the CPCN to build a new WFGD at Mill Creek Unit 3 is the result of a comprehensive inspection of the physical condition of the existing WFGD at Unit 4, as well as a detailed revision to its cost estimates to refurbish versus build new. LG&E determined that the total current estimated costs associated with rehabilitating the existing WFGD at Mill Creek Unit 4 for an additional 20-plus-year life in order to serve Mill Creek Unit 3 is much higher than originally anticipated.

Cost of the revised project pegged at $132m

The original capital cost estimate to rehabilitate the existing WFGD at Mill Creek Unit 4 was $74m. LG&E later obtained further detailed engineering studies and cost estimates and has determined that the capital cost to upgrade the existing Mill Creek Unit 4 WFGD is now estimated to be $161m. LG&E has also now determined that the capital cost to construct a new WFGD for Mill Creek Unit 3 would be $132m.

LG&E will need to reduce the level of SO2 emissions from all Mill Creek units by 2017 to be in compliance with the new one-hour SO2 National Ambient Air Quality Standard (NAAQS). This reduction in SO2 emissions is required as a part of the Commonwealth of Kentucky State Implementation Plan (SIP) applicable to Jefferson County, Ky., which is expected to be declared a nonattainment area. The SIP requirement in Kentucky is unique to LG&E and its location in a non-attainment area, the commission noted.

In addition to the NAAQS requirements, the Mill Creek Units must be in compliance with MATS, which establishes a surrogate acid gas emission limit. To comply with MATS, LG&E will have to install upgraded WFGDs at the Mill Creek units by April 2015, but it is expected to be able to take advantage of a provision for a broadly available one-year extension through April 2016. LG&E’s request for this first year extension must be submitted to the Kentucky Division of Air Quality no later than December 2014, and the extension request will need to be supported by specific contract and engineering documentation. LG&E told the commission it is aware of no reason why the one-year extension would not be granted.

If the WFGD construction cannot be completed in time to permit Mill Creek Unit 3 to operate in compliance with the MATS requirements by April 2016, either a second year extension would be necessary or replacement power would need to be purchased from the market after April 2016. LG&E’s ability to receive a second one-year extension of MATS, if needed, is uncertain at this time, and its current plans do not include a second one-year extension.

If a new or refurbished WFGD is not installed at Mill Creek Unit 3 by April 2016, the unit will not be available to meet LG&E’s load during the 2016 summer peak season, and LG&E would be required to make arrangements to purchase power to meet its customers’ load.

“Having found that the construction of a new WFGD at Mill Creek Unit 3 is more cost-effective and will provide additional environmental benefits over the refurbishing of the existing WFGD at Unit 4 for use at Unit 3, the Commission will modify the CPCN issued on December 15, 2011 in Case No. 2011-00162 to authorize a new WFGD at Mill Creek Unit 3,” said the Feb. 15 order. “In addition, the Commission finds good cause to grant LG&E’s motion to amend its application to include a request to modify Project 26 [the refurbished WFGD] in its 2011 Plan to include a new WFGD at Mill Creek Unit 3 and allow for its cost recovery by ECR surcharge.”

LG&E is a unit of PPL Corp. (NYSE: PPL).

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.