Consumers Energy needs the initial 700 MW of capacity at the new Thetford gas-fired power plant largely to replace capacity when operations at seven coal-fired units are suspended due to clean air compliance needs.
In a July 12 application filed at the Michigan Public Service Commission, this CMS Energy (NYSE: CMS) unit asked for a certificate of necessity (CON) for the construction of a nominal 700 MW natural gas-fueled combined cycle facility in Thetford Township, Genesee County.
Notable is that Consumers is permitting this plant as a 1,400-MW facility, but is only asking the state commission right now for approval on the first 700 MW.
Consumers Energy requested:
- A certificate of necessity that the power to be supplied as a result of the proposed construction of the Thetford Plant is needed;
- A certificate of necessity that the size, fuel type, and other design and operating characteristics of the proposed Thetford Plant represent the most reasonable and prudent means of meeting that power need;
- A certificate of necessity that the estimated capital costs of and the financing plan for the proposed Thetford Plant, including, but not limited to, the costs of siting and licensing the new facility and the estimated cost of power from the new electric generation facility will be recoverable in rates from Consumers Energy’s customers.
The Thetford project is part of Consumers Energy’s 2013 Integrated Resource Plan (IRP), filed along with the July 12 application. The IRP report and supporting materials represent the results of extensive analysis of the capacity and energy needs of Consumers Energy’s customers over more than 25 years from 2013 through 2040 and evaluation of the most cost-effective combinations of resources to meet those needs under an array of future scenarios and sensitivities.
“The results of this analysis show a capacity and energy supply need beginning in 2016, primarily caused by the Company’s announced intention to suspend operations at seven of its smaller coal fired generating units,” the application said. “Originally scheduled to stop generating April 16, 2015, in order to comply with the start of enforcement of the US EPA’s Mercury and Air Toxics Standards, the Company requested and was granted an extension by the Michigan Department of Environmental Quality to extend the compliance date for the seven units to April 16, 2016. The suspension of operations of these units will reduce the available installed capacity of Consumers Energy’s electrical supply resources resulting in a significant shortfall of electric generating capacity to meet electric load and reserves required by the Midcontinent Independent System Operator (‘MISO’). The analysis conducted for this IRP shows that the need for energy and capacity is best met with a high capacity factor resource. The resource type that most economically fills this need is a natural gas fueled combined cycle generating plant with a nominal output of approximately 700 MW, supplemented by other resources.”
The proposed Thetford Plant is to be located on a company-owned approximately 230-acre parcel located in Thetford Township near Flint. The Thetford Township site is home to existing generating facilities whose operation is currently suspended. Use of this site enables the utility to take advantage of the existing high-pressure gas supply and electric transmission lines. The estimated capital cost of the Thetford Plant is about $750m.
Generation hole to fill is about 1,000 MW
Richard Blumenstock, Director of Electric Sourcing and Resource Planning for Consumers, testified that the company is facing an electric generation capacity need of approximately 1,000 MW in 2016 due to the suspension of operations of seven of its oldest coal-fired units. The cost of compliance with environmental regulations makes it uneconomic to continue to operate these units for the foreseeable future.
Brian Gallaway, Director of Fossil Fuel Supply within the Energy Supply Operations Department at Consumers, said that all of the sources from which natural gas price forecasts were obtained refer to increased natural gas availability and lower natural gas prices due to the increase in U.S. shale gas production, even with increased utilization of gas as a fuel for electric generation. In its 2013 Annual Energy Outlook, the U.S. Energy Information Administration (EIA) projects that shale gas, which is projected to grow by 113% between 2011 and 2040, is the “greatest contributor to natural gas production growth,” Gallaway noted.
Charles Hookham, employed by HDR Engineering as Vice President-Utility Projects, said in supporting testimony that after review of a number of different options, the company selected a combined cycle configuration for the proposed Thetford Plant utilizing two large frame combustion turbine generators (CTGs) each coupled to a heat recovery steam generator (HRSG) and single steam turbine/generator (ST/G). “We believe that this arrangement, known in industry as a 2×1 combined cycle, offers the best combination of reliable and efficient performance, nominal generation of 700 MW, low emissions and manageable cost of construction and schedule risk issues,” Hookham added.
The term “nominal” is used as the actual power out is a function of ambient environmental conditions. During summer months when the air intake is warm to hot, net power generation may be slightly less than 700 MW, but winter power output may well approach 800 MW, Hookham noted.
‘Classic 7’ coal units to be shut, with others getting new air controls
Linda Hilbert, Manager of Environmental Services at Consumers, said the seven coal-fired units to be suspended are BC Cobb Units 4 and 5, JC Weadock Units 7 and 8, and JH Whiting Units 1, 2, and 3 (called the “Classic 7”). This will result in a 926 MW reduction in capacity in 2016. The capital cost to install needed environmental equipment on these units is anticipated to be about $400m, at a minimum. This cost assumes lower cost controls for MATS compliance. There is the potential that the lower cost controls may not be feasible for one or more of these units and thus higher cost controls would be required for MATS compliance which would increase this amount.
In order to suspend operation of the Classic 7, MISO must be notified so studies can be performed to determine if each unit is considered a System Support Resource (SSR). In February 2012, the company submitted an application to the MISO for the suspension of operations of its Classic 7 units from April 1, 2015, to March 31, 2018. In November 2012, the company received responses back from the MISO indicating a “SSR study concluded the units are needed for system reliability.” Since these units were deemed SSR units by the MISO, they became eligible for a one-year compliance extension. The extension was requested and granted by the Michigan Department of Environmental Quality (MDEQ) on Feb 28. On March 14, the company amended its application for the suspension of operations of the Classic 7 units from April 15, 2016, to April 15, 2019. On June 5, the MISO approved the company’s request.
Hilbert said Consumers has moved and is continuing to move to install emissions controls on the coal units that it doesn’t plan to shut. For SO2 compliance, it began the installation of Spray Dry Absorbers (SDAs) at Karn Units 1 and 2 and Campbell Unit 3 in 2010. For NOx compliance, it currently has Selective Catalytic Reduction (SCR) installed at Karn Units 1 and 2 and Campbell Units 2 and 3.
Activated Carbon Injection (ACI) coupled with a particulate matter collection device is required by 2016 to achieve the mercury reductions required by both the MATS and a Michigan mercury rule. Some form of Flue Gas Desulfurization (FGD), which also needs to be paired with a particulate matter collection device, is required in order to achieve the reduction of acid gases required by MATS. The Campbell units applied for and were granted a one-year MATS compliance extension. Campbell Units 1 and 2 will be equipped with Dry Sorbent Injection (DSI) and Campbell Unit 3 and Karn Units 1 and 2 will be equipped with SDAs for acid gas reduction. All five units will also be equipped with Pulse Jet Fabric Filters (PJFF) and ACI for mercury reductions.
Fuel restrictions at Campbell Unit 2 may be necessary to assure compliance with the MATS HCl limit when utilizing DSI technology. This is in effect a semi-permanent, or potentially permanent, derate to the unit because it cannot achieve its full load capability without burning an approximate 40% eastern, 60% western coal blend, Hilbert said.