A consent decree worked out with the federal government and the Sierra Club will mean some higher fuel (and related emissions control chemical) costs in 2014 for Wisconsin Power and Light (WPL) at its coal-fired plants.
Officials from parent Alliant Energy (NYSE: LNT) provided July 16 testimony to the Wisconsin Public Service Commission in an annual fuel cost review case.
Terry Kouba, employed by Alliant Energy Corporate Services (AECS) as Director–Generation Operations, outlined some of the decree impacts and the status of new, in-construction emissions controls for two coal-fired units.
The terms of the consent decree align with the energy resources strategy that WPL announced in July 2012, Kouba noted. That strategy includes transitioning WPL’s generation fleet to meet customers’ energy needs in a cost-effective manner now and into the future, while continuing to limit emissions and advance renewable energy. The executed consent was submitted to the U.S. District Court for the Western District of Wisconsin on April 22 in two cases. After a public comment period, the court simultaneously entered the consent decree in the two cases on June 17.
The decree contains various requirements and provisions with which WPL must comply in 2014. Those provisions include requirements pertaining to the emissions of NOx at Edgewater Unit 4 and the Nelson Dewey Generating Station.
There are two requirements related to NOx emissions at Edgewater Unit 4, which potentially impact 2014 fuel costs when compared to 2013 monitored fuel costs. First, the decree requires the continuous operation at Edgewater Unit 4 of the selective non-catalytic reduction (SNCR) and low NOx combustion system. Second, it establishes specific limits on the NOx emission rate at Edgewater Unit 4.
The decree requires, in part, the “Continuous Operation of the existing Selective Non-Catalytic Reduction System and Low NOx Combustion System so that Unit 4 achieves and maintains a 30-Day Rolling Average Emission Rate for NOx of no greater than 0.170 lb/mmBTU.” Also, the decree requires, commencing on Jan. 1, 2014, the continuous operation of the SNCR and low NOx combustion system “so that Unit 4 achieves and maintains a 12- Month Rolling Average Emission Rate for NOx of no greater than 0.150 lb/mmBTU.”
Compared to the 2013 monitored fuel costs, WPL is forecasting an increased operation in 2014 of the SNCR and low NOx combustion system. This increased operation of the NOx controls – in particular, the SNCR – is forecasted to result in an increase in costs for chemicals to operate these controls.
Nelson Dewey SNCR will need to operate in 2014
The limit on the NOx emission rate at Nelson Dewey is forecasted to impact 2014 fuel costs, when compared to 2013 monitored fuel costs. The decree requires WPL to “achieve and maintain a combined 12-Month Rolling Average Emission Rate for NOx at Nelson Dewey Units 1 and 2 of no greater than 0.300 lb/mmBTU.”
Both Nelson Dewey Units 1 and 2 have an installed SNCR. The 2013 monitored fuel cost plan does not include costs associated with operating the SNCR. However, WPL will need to operate the SNCRs in order to comply with the NOx limits. As a result, WPL is forecasting an increase in chemical costs associated with operating the SNCR.
There are various other requirements contained in the consent decree with which WPL must comply in 2014. Those requirements include, but are not limited to: NOx emission limits at Columbia Units 1 and 2 and Edgewater Unit 5; SO2 emission limits at Edgewater Unit 4 and Nelson Dewey; and plant-wide annual emission caps (on a tons per year basis) for NOx and SO2 at Columbia, Edgewater, and Nelson Dewey.
As for new emissions projects, Kouba noted that the dry flue gas desulfurization (DFGD) and baghouses at Columbia Units 1 and 2, which will reduce SO2 and mercury (Hg) emissions, were previously approved by the commission. The construction of those controls is proceeding on schedule, with the control systems currently anticipated to be placed in service in spring of 2014. The decree does not impose a limit on the SO2 emission rate on Columbia Units 1 and 2 in 2014; such a limit will apply, though, in 2015. Columbia is subject to a plant-wide annual emission cap (on a tons per year basis) for SO2 in 2014. There are no requirements related to Hg contained in the decree.
WPL replacing capacity from shut Kewaunee nuclear plant
Melanie Schmidt, employed by AECS as Manager–Fuel & Operational Planning, testified that the major driver for higher forecasted fuel costs in 2014 compared to 2013 monitored rates is the expiration of WPL’s purchased power agreement (PPA) with Dominion Energy Kewaunee for output from the recently-shut Kewaunee nuclear plant. That agreement expires Dec. 21, 2013, resulting in a need to replace this energy.
WPL relies upon a portfolio of owned generating assets, PPAs and market purchases to meet its energy obligation. In anticipation of having a larger open energy position in 2014, WPL issued requests for proposals (RFPs), which sought to secure cost-competitive means by which to lock in a portion of our customers’ energy costs.
“After evaluating RFP responses, WPL ultimately entered into two PPAs, which partially offset the energy lost through the expiration of the PPA with Kewaunee,” Schmidt wrote. “WPL entered into a PPA with one provider for around the clock delivery of 50 MWh per hour. WPL also entered into a PPA with another provider for around the clock delivery of monthly volumes ranging from 50 MWh per hour to 150 MWh per hour. WPL’s remaining open position, not covered by owned generation or the portfolio of PPAs, is forecast to be filled with market purchases.”