Duke Energy Florida projects higher coal burn in 2014

In a rare piece of good news for the coal industry at a time of depressed coal burn due to factors like cheap natural gas and slack power demand, Duke Energy Florida is projecting an uptick in coal burn next year at its Crystal River power plant.

In a report filed Aug. 30 at the Florida Public Service Commission that updates 2013 actual fuel costs so far, and provides initial 2014 burn projections, this Duke Energy (NYSE: DUK) said it is likely to burn 5.3 million tons of coal in 2014, against 5.1 million tons projected for 2013. The coal burn in 2012 was only 4.5 million tons, and 4.7 million tons in 2011.

Coal was 31% of the utility’s generation mix in 2011, and 29% in 2012, with 34% projected in both 2013 and 2014.

The cost of coal was $89.61/ton ($3.82/mmBtu) in 2011 and $89.78/ton ($3.83/mmBtu) in 2012, and projected for $89.16/ton ($3.82/mmBtu) in 2013 and only $78.66/ton ($3.34/mmBtu) in 2014.

“Coal price projections are based on the current coal supply, transportation agreements, and forecasted deliveries,” said the report. “It assumes environmental restrictions on coal quality remain in effect as per current permits: 2.1 lbs. per million BTU sulfur dioxide limit for Crystal River Units 1 and 2. Crystal River 4 and 5 have operating scrubbers which allow for consideration of higher sulfur coal.”

Notable is that the coal mix for Crystal River Units 1 and 2 is due for at least a short-term change as the utility looks for a new coal mix to help with clean-air compliance. The Florida Department of Environmental Protection on July 8 issued a final air permit approval for a Duke Energy Florida test burn program, to be completed by the end of this year, at Crystal River Units 1 and 2.

Said the DEP approval: “The test burn program will involve the temporary installation, testing, and operation of new coal blends, equipment, and process. The coal blending of Powder River Basin (PRB) with Western Bituminous (WB) will be done offsite to reduce fugitive emissions impacts. As part of the test burn program, Units 1 and 2 will have additional temporary post combustion controls such as hydrated lime injection and activated carbon injection upstream to the electrostatic precipitator. This authorization is only for a test lasting no more than ninety days in duration to determine whether this fuel blend along with post combustion controls reduces overall emissions impact.”

The worst case emission scenario would be firing WB coal only. The test burn program is being initiated in an attempt to reduce overall emissions such as particulate matter, acid gases, and mercury to determine the potential for units 1 and 2 to comply with the federal Mercury and Air Toxics Standards (MATS) during the 2015-2020 timeframe.

Crystal River Units 1 and 2 have traditionally been fired with Central Appalachia coal. U.S. Energy Information Administration data shows that the plant got its coal earlier this year from various suppliers, including B&W ResourcesArch Coal SalesJames River CoalBlackhawk Mining and Alpha Natural Resources.

Crystal River Units 4 and 5 are coal-fired facilities that are newer, bigger and retrofitted recently with new emissions controls, so they are not part of this program. Unit 3 is a shut nuclear facility.

In April 1 testimony filed at the Florida PSC, utility official Benjamin Borsch said the utility cannot continue to operate the Crystal River Units 1 and 2 without implementation of additional measures to bring the units into compliance with MATS. Accordingly, the two main options that PEF considered were: installing new emission control systems to reduce NOx, SO2 and mercury emissions; and retiring the units and replacing the generation.

DEF has decided that installing emission controls at Crystal River Units 1 and 2 is not the most cost-effective option. PEF is now evaluating alternative fuel options that would allow Crystal River Units 1 and 2 to continue operating in compliance with MATS for a limited period of time, which is the reason for the coal test burns. If these tests are successful, it may be possible for PEF to extend Crystal River Units 1 and 2 operations to the 2018-2020 timeframe while still being in compliance with MATS.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.