South Carolina Electric & Gas (SCE&G) has identified a total of six coal-fired units that it intends to retire by 2018, subject to future developments in environmental regulations, among other matters, said parent SCANA Corp. (NYSE: SCG).
SCANA, in its Feb. 28 annual Form 10-K report, said these targeted units have an aggregate generating capacity (summer 2012) of 730 MW. One unit, with a net carrying value of $20m at Dec. 31, 2012, was retired. The net carrying value of the remaining units totaled $362m at Dec. 31, 2012.
One unit was retired in December 2012 (located at Canadys, net summer rating of 90 MW). Another unit, Urquhart Unit 3, was fueled by coal in 2012 and will be fueled exclusively with natural gas in 2013 and subsequent years until it is ultimately retired.
In 2012, six of the company’s seven fossil fuel-fired plants used coal. Coal is primarily obtained through long-term supply contracts with suppliers located in eastern Kentucky, Tennessee and West Virginia. These contracts provide for about 2.3 million tons annually. Sulfur restrictions on the contract coal range from 1% to 2%. These contracts expire at various times through 2015. Spot market buys may occur when needed or when prices are believed to be favorable.
During 2012, SCE&G owned and operated the following units with the net capacity (summer rating) indicated:
- ten coal-fired fossil fuel units (2,434 MW), including Williams, which is owned by SCANA subsidiary South Carolina Generating, which sells electricity from this plant solely to SCE&G;
- eight combined cycle gas turbine/steam generator units (gas/oil-fired, 1,310 MW);
- 16 peaking turbine units (352 MW);
- four hydroelectric plants (218 MW); and
- one pumped storage facility (576 MW).
In addition, SCE&G receives an output of 85 MW (net summer) from the Kapstone cogeneration facility, which can fire some coal. These ratings, which are updated at least on an annual basis, reflect the expectation for the coming summer season. SCE&G’s nuclear capacity (648 MW net summer) is comprised of its two-thirds ownership of Summer Station 1.
The coal-fired capacity, excluding the coal-to-gas converted Urquhart Unit 3, is:
- McMeekin, in-service 1958, 250 MW (retirement target);
- Canadys, in-service 1962, 295 MW (doesn’t include 90-MW unit retired last year, rest of plant also retirement target);
- Wateree, in-service 1970, 684 MW;
- Williams, in-service 1973, 605 MW;
- Cope, in-service 1996, 415 MW; and
- Kapstone, in-service 1999, 85 MW.
Cheap natural gas is driving a lot of decisions at SCE&G. In 2010, the average cost of coal used was $4.49/mmBtu, then $4.47/mmBtu in 2011 and $4.49/mmBtu in 2012. But while coal costs were stable over that three-year period, the cost of natural gas consumed plunged from $5.48/mmBtu in 2010, to $4.86/mmBtu in 2011 and then to a very low $3.71/mmBtu in 2012. So in 2012, natural gas became cheaper than coal.
SCANA didn’t offer any coal or gas price predictions for 2013 and beyond. But it did offer actual percentages that coal and gas/oil had of its generation mix in the 2010-2012 period, and predictions for 2013-2015. Coal was 52% of the fuel mix in 2010, then 50% in both 2011 and 2012, with a predicted plunge to 39% in 2013, then a rebound to 47% in 2014 and 44% in 2015. Natural gas/oil, on the other hand, was 23% in 2010, 28% in both 2011 and 2012, with a forecasted jump to 34% in 2013, then a fall to 29% in 2014 and 32% in 2015. Other sources, like nuclear and hydro, have fairly stable percentages over that time.
SCE&G is constructing two 1,117-MW nuclear units at the Summer Station. SCE&G will jointly own the new units with one or more parties, and SCE&G will be responsible for 55% of the cost and receive 55% of the output, with other parties responsible for and receiving the remaining share. The first new unit is scheduled for substantial completion in 2017, and the second in 2018.
For the three years ended Dec. 31, 2012, the company’s capital expenditures for environmental control equipment at its fossil fuel stations totaled $79.6m. In addition, the company made expenditures to operate and maintain environmental control equipment at its fossil plants of $10.2m in 2012, $7.9m during 2011 and $6.5m during 2010. It also made expenditures to handle waste coal ash of $7.9m in 2012, $8.7m in 2011 and $5.9m in 2010.