Arizona Electric Power Cooperative has offered a plan to the U.S. Environmental Protection Agency to switch one of the coal units at its Apache power plant to natural gas and to install selective non-catalytic reduction (SNCR) for NOx control on the other coal unit.
Arizona Electric is in the middle of a rate case at the Arizona Corporation Commission, with details about its regional haze plan contained in a June 13 filing in that case. The cooperative said that EPA’s December 2012 federal implementation plan (FIP) for regional haze control in Arizona would require installation of costly selective catalytic reduction (SCR) on both coal units, at a cost of about $200m, while its alternative for a coal-to-gas switch and SNCR has an estimated cost of a little over $30m.
Arizona Electric said it proposed the haze alternative to EPA, then nine days later, on June 6, EPA granted reconsideration of the FIP. No EPA decision was made by the time this testimony was filed.
For the coal-fired Apache Units 2 and 3 (also known as ST2 and ST3), the FIP final emissions limit for NOX is 0.07 lbs/MMBtu, determined as an average of the two units, based on a rolling 30-boiler-operating-day average. Compared to the proposed emissions limit of 0.05 lb/ MMBtu on each unit, this higher limit and the addition of a two-unit average provides an extra margin of compliance to account for periods of startup and shutdown as well as additional operational flexibility for Apache given Arizona Electric’s status as a small entity, EPA said. The final compliance date for this NOX limit is five years from the date of publication of the final rule.
The June 13 testimony, which in part responds to an audit report from The Liberty Consulting Group, touched on a number of areas. The cooperative said its coal burn in 2013 is projected at around 1.3 million tons.
In heavily redacted testimony from Emily Regis, Fuels Resource Administrator, the cooperative responded to a Liberty criticism about 2012 coal procurement. In 2011, Arizona Electric was wrapping up the final year of a three-year contract with Peabody COALSALES for the bulk of its coal need over that period, with that coal coming from the El Segundo and Lee Ranch strip mines in New Mexico.
A key factor for 2012 procurement was that in November 2011, Arizona Electric won a decision against the BNSF Railway at the U.S. Surface Transportation Board. The board set maximum lawful rates through 2018, effectively lowering the cooperative’s rail rates, and also allowing it to negotiate better rates with the competing Union Pacific. In 2012, Arizona Electric decided to take short-term test coal (the figure 300,000 tons is used in a heavily redacted section) instead of burning coal out of inventory. Regis also noted that the cooperative burned cheap gas in its coal units in the first half of 2012.
Regis indicated that test blends burned in 2012 have prepared the cooperative to secure cheaper, lower-quality coal in the future by opening up its supply sources. No identifying information about the new coal survived redacting.
U.S. Energy Information Administration data shows two coal suppliers to Apache in the first four months of this year: Peabody COALSALES out of El Segundo; and ENSERCO out of Arch Coal’s Black Thunder strip mine in the Wyoming end of the Powder River Basin.
In 2012, EIA data shows El Segundo deliveries in every month but February. Coal out of Kiewit’s low-Btu Buckskin mine in the Wyoming PRB was delivered in January and February, and coal out of Black Thunder was delivered in every month for the April-December period. Black Thunder coal is relatively high Btu (about 8,800 Btu/lb) for the Wyoming PRB, while Buckskin is on the low end of the heat scale. In March, there were only deliveries from El Segundo.