MATS may endanger four MidAmerican Energy coal units

The U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) and Clean Air Interstate Rule (CAIR) are expected to have some impact on the coal-fired power plants of MidAmerican Energy, the company said in its March annual Form 10-K report.

MATS has an effective date of April 16, 2012, and requires that new and existing coal facilities achieve emission standards for mercury, acid gases and other non-mercury hazardous air pollutants. Individual sources may be granted up to one additional year, at the discretion of the Title V permitting authority, to complete installation of controls or for transmission system reliability reasons.

“While the final MATS continues to be reviewed by MidAmerican Energy, MidAmerican Energy believes that its emissions reduction projects completed to date or currently permitted or planned for installation, including scrubbers, baghouses and electrostatic precipitators, are consistent with the EPA’s MATS and will support MidAmerican Energy’s ability to comply with the final rule’s standards for acid gases and non-mercury metallic hazardous air pollutants,” said the Form 10-K. “MidAmerican Energy will be required to take additional actions to reduce mercury emissions through the installation of controls or use of sorbent injection at certain of its coal-fueled generating facilities and otherwise comply with the final rule’s standards.

“MidAmerican Energy is evaluating whether or not to close Walter Scott, Jr. Energy Center Units 1 and 2, and George Neal Energy Center Units 1 and 2,” the company said. “Incremental costs to install and maintain emissions control equipment at MidAmerican Energy’s coal-fueled generating facilities and any requirement to shut down what have traditionally been low cost coal-fueled generating facilities will likely increase the cost of providing service to customers. In addition, numerous lawsuits are pending against the MATS in the D.C. Circuit [federal appeals court], which may have an impact on MidAmerican Energy’s compliance obligations and the timing of those obligations,” MidAmerican added.

Neal Unit 1 has 134 MW of net capacity, while Neal Unit 2 has 284 MW. Scott Unit 1 has 37 MW and Scott Unit 2 has 81 MW.

Last August, a federal appeals court vacated EPA’s Cross-State Air Pollution Rule, leaving the older CAIR program in its place. MidAmerican Energy said has installed or is in the process of installing emissions controls at some of its coal-fueled facilities to comply with the CAIR and may purchase NOx and SO2 emissions credits for emissions in excess of allocated allowances. The cost of these credits is subject to market conditions at the time of purchase and historically has not been material. The full impact of the CSAPR, or the CAIR, cannot be determined until the outcome of the litigation pending in the D.C. Circuit or the stay of the CSAPR is lifted. It is possible that the existing CAIR or a replacement rule may include more stringent requirements to reduce NOx and SO2 emissions.

In April 2012, MidAmerican submitted to the Iowa Utilities Board (IUB) an increased estimate of environmental capital expenditures. The plan estimated that spending for emission equipment for compliance with current air quality requirements would total $220m for 2013 through 2015. In addition to those expenditures, the forecasted capital expenditures include $203m for environmental capital expenditures at facilities jointly owned but not operated by MidAmerican Energy and other environmental projects not covered by the plan submitted to the IUB. Total forecasted environmental capital spend is $214m, $154m and $55m for 2013, 2014 and 2015, respectively, and consists primarily of expenditures at George Neal Units 3 and 4 and Ottumwa.

Coal a shrinking part of MidAmerican generation output

Coal has been falling lately as a percentage of MidAmerican’s generation, with “wind and other” picking up the slack. Coal fell from 66% of generation in 2010, to 64% in 2011 and 58% in 2012. Nuclear held steady at 11% in all three years. Natural gas was 2% in 2010, falling to 1% in 2011, then rebounding to 2% in 2012. Wind and other went from 10% in 2010, to 13% in 2011, and then to 19% in 2012. Any amounts above those total percentages in each year came from purchased power.

All of the coal-fueled facilities operated by MidAmerican Energy are fueled by low-sulfur, western coal from the Powder River Basin in Wyoming. MidAmerican’s coal supply portfolio includes multiple suppliers and mines under short-term and multi-year agreements of varying terms and quantities through 2016. MidAmerican Energy’s coal supply portfolio has all of its expected 2013 requirements under fixed-price contracts.

Effective Jan. 1, 2013, MidAmerican Energy has a multi-year long-haul coal transportation agreement with BNSF Railway, an affiliate company under parent Berkshire Hathaway, for the delivery of coal to all of the MidAmerican-operated coal facilities other than the George Neal Energy Center. Under this agreement, BNSF delivers coal directly to the Walter Scott Jr. Energy Center and to an interchange point with Canadian Pacific Railway for short-haul delivery to the Louisa and Riverside energy centers. MidAmerican has a multi-year long-haul coal transportation agreement with Union Pacific Railroad for the delivery of coal to the George Neal Energy Center effective Jan. 1, 2013.

MidAmerican’s coal units, all in Iowa, with net total ratings and MidAmerican’s share of that capacity, are:

  • Neal 1, 134 MW (134 MW);
  • Neal 2, 284 MW (284 MW);
  • Neal 3, 492 MW (354 MW);
  • Neal 4, 644 MW (262 MW);
  • Louisa, 746 MW (657 MW);
  • Ottumwa, 719 MW (374 MW);
  • Riverside 3, 4 MW (4 MW);
  • Riverside 5, 133 MW (133 MW);
  • Scott 1, 37 MW (37 MW);
  • Scott 2, 81 MW (81 MW);
  • Scott 3, 704 MW (557 MW); and
  • Scott 4, 814 MW (485 MW).

MidAmerican Energy’s total net generating capability accredited by Midwest ISO in the summer of 2012 was 5,343 MW, including a reduction for 167 MW of net capacity sales. Accredited net generating capability is the amount of generation available to meet the requirements on MidAmerican Energy’s system and consists of MidAmerican Energy-owned generation, certain customer “behind the meter” generators and the net amount of capacity purchases and sales.

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.