The Arkansas Public Service Commission has determined, after over a year of often contentious review, that the installation of new air emissions controls at the coal-fired Flint Creek plant in Gentry, Ark., is in the public interest.
The decision was issued July 10 in response to a request by American Electric Power (NYSE: AEP) subsidiary Southwestern Electric Power Co. (SWEPCO). SWEPCO and Arkansas Electric Cooperative Corp. (AECC) each own 50% of the 528-MW plant. SWEPCO operates the facility, which is the only baseload power plant in Northwest Arkansas. That fact was a key argument in the PSC review, with the plant co-owners saying that shutting the plant down would harm grid reliability in Northwest Arkansas.
To comply with new U.S. Environmental Protection Agency regulations, SWEPCO must install additional environmental controls to continue operation of Flint Creek beyond April 16, 2016. SWEPCO has secured from the Arkansas Department of Environmental Quality a one-year extension beyond EPA’s April 2015 Mercury and Air Toxics Standards (MATS) deadline to continue operations if the company is still in the process of installing controls at that point.
“The Commission has done a thorough job of evaluating our request, and we are very pleased that they have found the Flint Creek retrofit to be in the public interest,” said Venita McCellon-Allen, SWEPCO President and COO. “The Commission’s decision recognizes that the addition of new technology will allow Flint Creek to meet stringent new EPA regulations and continue providing reliable and affordable power to SWEPCO customers and Arkansas Electric Cooperative members.”
Emissions control construction due to begin in January
Pending the approval of environmental permits, SWEPCO expects construction of the retrofit equipment to begin in January 2014. The controls include a dry flue gas desulfurization system (DFGD), commonly known as a scrubber, to reduce SO2; low NOx burners (LNB) and overfire air (OFA) to reduce NOx emissions; activated carbon injection (ACI) to reduce mercury emissions; and a fabric filter, also known as a baghouse, to filter particulate matter.
The estimated direct cost of the project is $408m, with SWEPCO’s 50% share at $204m. The estimated cost impact for SWEPCO’s Arkansas customers, beginning in 2017, would be an increase of about $2.97 per month, or 3.85% for a residential customer using 1,000 kWh per month. For commercial customers, the increase would be approximately 3.87 percent. Cost recovery will be determined in a future proceeding at the APSC.
“The Commission’s decision recognizes the importance of Flint Creek as a base load power plant for Northwest Arkansas. It also reflects a place for coal in Arkansas’ energy future, continuing SWEPCO’s strategy of fuel diversity that avoids over-reliance on any one fuel to provide greater fuel cost stability for our customers,” McCellon-Allen said. SWEPCO’s generation fleet includes coal, lignite and natural gas units, plus purchased power from wind projects.
As a baseload plant, Flint Creek is necessary to meet customer demand and Southwest Power Pool reliability reserve requirements, as well as provide voltage support for the local transmission grid. Flint Creek has anchored the Northwest Arkansas grid since 1978.
U.S. Energy Information Administration data shows the plant earlier this year taking coal from Peabody Energy‘s (NYSE: BTU) North Antelope Rochelle mine and the Belle Ayr mine of Alpha Natural Resources (NYSE: ANR), both of which are located in the Wyoming end of the Powder River Basin.
Commission had this matter under review since February 2012
SWEPCO filed its request with the PSC in February 2012. Extra time was given to the companies by the commission around the beginning of this year to add more testimony about the need for this plant to support the Northwest Arkansas load pocket, which may have been the key to getting this project approved. The commission considered the comments of various intervenors in the case, including some who pitched for alternatives like new natural gas combined cycle (NGCC) capacity.
“Having carefully considered and weighed all of the evidence presented by the Parties in this proceeding, the Commission finds that there is substantial evidence of record, from both a cost and reliability perspective, which supports the installation of the required EPA environmental controls at Flint Creek so that Flint Creek can continue to be operated as a baseload electric generation plant in the Northwest Arkansas area,” said the July 10 order.
“Given that the life-cycle cost estimates of the NGCC plant alternatives evaluated are similar to that of retrofitting Flint Creek, the determinative factor in this case is the issue of power supply reliability in Northwest Arkansas,” the order said. “The Commission also finds that there is substantial evidence of record that the installation by SWEPCO of the required EPA environmental controls at Flint Creek is the most timely and most reliable power supply solution for Northwest Arkansas. The Commission also finds that the Northwest Arkansas reliability issues will only be exacerbated by the retirement of Flint Creek and that the retention of Flint Creek will continue to provide a cost-effective and necessary reliable source of needed baseload electric power in Northwest Arkansas.”