DeSoto may mothball or dismantle its 310-MW power plant in Florida

DeSoto County Generating Co. LLC told the Florida Public Service Commission on Sept. 13 that it can supply gas-fired peaking power to Florida Power & Light at a cheaper cost than FPL’s proposed repowering projects.

DeSoto in the Sept. 13 filing asked the commission to let it intervene in an annual environmental cost recovery case under which FPL on June 28 applied for cost recovery on its repowering projects.

DeSoto is a customer of FPL and the owner and operator of the DeSoto Generating Facility, a natural gas-fired plant located in Arcadia, Fla. As a customer of FPL, DeSoto said it has substantial interests in having fair, just, and reasonable rates will be determined by the commission’s actions determining FPL’s allowable Environmental Cost Recovery Clause (ECRC) rates in this docket.

“DeSoto believes that FPL can obtain peaking capacity at significantly lower costs than requested in its Petition for Approval of Environmental Cost Recovery (‘FPL Petition’) filed in this docket on June 28, 2013, and accordingly, DeSoto believes that FPL’s Petition should be denied as proposed,” the company added.

According to FPL’s petition, it plans to add 1,608 MW of combustion turbine (CT) peaking capacity to its generating system at a cost of approximately $822m, including transmission and integration costs, in order to comply with certain environmental regulations, DeSoto noted. FPL’s projected cost of the generating units only, excluding transmission and integration costs, is $771m, it added. FPL’s total costs are approximately $511 per kW and the costs for the power block (generating units) only are approximately $479 per kW, DeSoto added. “Based on its knowledge of the Florida bulk power supply system and Florida wholesale power markets, DeSoto believes that FPL can acquire additional peaking capacity at costs significantly less than those proposed by FPL,” the company said.

FPL has 48 peaking gas turbines (GTs) in total among three generation sites: Plant Fort Lauderdale (PFL), Plant Port Everglades (PPE) and Plant Fort Myers (PFM). This particular combustion technology was installed at these plants in the 1960s and entered into commercial operation in the early 1970s. The plan applied for in June 28 would involve installation of five new CTs at PFL and three new CTs at PFM. No new CTs will be installed at PPE.

The new CT units at both PFL and PFM will use natural gas as the primary fuel when available and also will be capable of burning a light fuel oil as a back-up fuel.

  • For PFL, the project would result in the retirement of 24 of its 35-MW GTs with a combined summer peak capacity of 840 MW and installation of five CTs with a combined summer rating of 1,005 MW.
  • For PFM, the project would result in the retirement of 12 of its 54-MW GTs with a combined summer rating of 648 MW and installation of three CTs with a combined summer peak capacity of 603 MW.
  • For PPE, the project would result in the retirement of 12 of its 35-MW GTs with a combined summer rating of 420 MW.

LS Power exec says DeSoto is very similar to FPL’s planned new capacity

Filed on the same day was supporting testimony from Kathy French, employed by LS Power Development LLC as Assistant Vice President, Environmental. LS Power Development is the indirect owner of DeSoto County Generating.

French wrote that the DeSoto facility consists of two General Electric Frame 7241FA combustion turbines (CTs) with summer net generating capability of 310 MW when firing natural gas. The facility is interconnected to FPL’s transmission system at the FPL Whidden substation. The facility is tapped into the Florida Gas Transmission (FGT) natural gas pipeline. The facility is also capable of operating on No. 2 (diesel) fuel and has on-site backup fuel capability of 1.5 million gallons, which is sufficient for approximately 54 hours of full load operation with both combustion turbines running. The facility achieved commercial operation in June 2002.

French said the existing DeSoto facility is similar to what FPL plans through repowering. “According to the testimony of Michael DeBock, one of FPL ‘s witnesses in this docket, FPL is using cost and operating characteristics consistent with those of GE 7F A.05 CT technology,” French wrote. “The CT units at the DeSoto Generating Facility are GE 7241 FA units, which are very similar to the 7F A.05 CTs contemplated by FPL. Specifically, a permit issued by the Florida Department of Environmental Protection to another unrelated plant in April 2012 determined the appropriate permit limits for 7F A.05 CTs to be the same for NOx as contained in the Facility’s permit. So from an allowed NOx emissions perspective, there is no difference between the two technologies.”

LS Power offers to sell either capacity from the plant, or the plant itself

Sept. 13 testimony also came from Carolyne Wass, employed by LS Power Development as Senior Vice President, Asset Management.

“DeSoto has offered to sell the output of the Facility or the Facility itself to FPL at very favorable prices,” Wass wrote. “In fact, DeSoto has offered to sell the Facility itself to FPL at a price that is well below 40 percent of FPL’s reported cost per kilowatt of CT capacity for the units it proposes to install through its NO2 Compliance Project, while providing substantially the same attributes as the units proposed by FPL. Additionally, DeSoto has offered to include, in the already-low sale price for the Facility, (a) an upgrade in the Facility’s startup capability that will approximately match the startup performance metrics of FPL’s proposed CTs, and (b) the next major maintenance overhauls on both of the Facility’s CTs, at DeSoto’s cost, which would effectively make the units like new in many respects. In summary, DeSoto has offered FPL an option to meet its needs for CT capacity at tremendous savings to FPL and thus to FPL’s customers.”

Since coming on-line in 2002, numerous Florida utilities have purchased the output of  the DeSoto facility, including FPL, Wass noted. The facility’s output has been sold under various arrangements, including hour-to-hour non-firm energy sales, firm power purchase agreements of varying durations, and tolling agreements.

Prior to its acquisition by LS Power in 2009, the DeSoto facility had a long-term tolling agreement with FPL from the facility’s commercial operation date, June 2002, until May 2007. FPL and DeSoto also had a one year tolling agreement in calendar 2012.

On July 31, DeSoto provided a proposal to FPL’s management that included options for the purchase of the facility or a 10-year tolling agreement. The 10-year capacity/tolling agreement proposal contemplated using a form of agreement similar to that of the recent tolling agreement between DeSoto and FPL dated October 2011. That agreement lasted for one year. The pricing under this offer started with a fixed capacity charge of $1.75 per kilowatt-month from April 1, 2014, through March 31, 2017, and $2.50 per kilowatt-month from April 1, 2017, through March 31, 2024, subject to escalation at 2.5% per year for the 2018-2024 years.

The July 31 proposal alternatively offered to sell FPL the DeSoto facility for $51m. After a meeting between DeSoto management and FPL management on Aug. 5 to discuss the offer, DeSoto provided an updated offer to FPL on Aug. 28. The updated offer addressed FPL management emphasis on the need for fast start capability and offered to sell the DeSoto facility for $52.75m. Based on the facility’s summer capacity of 310 MW, this is approximately $170 per kilowatt of capacity, Wass said.

After consulting with the manufacturer, General Electric, DeSoto found that the startup capabilities of the units could be improved to approximately match those of FPL’s proposed CTs by purchasing GE’s “Fast Start OpFlex” package.

Utility-owned generation in Florida has grown lately, putting the DeSoto plant in danger if it can’t find power offtake deals, Wass pointed out. [“I]f we are unable to negotiate a medium-term or long-term power sale, or to sell the Facility itself, DeSoto will not be able to cover its operation and maintenance costs,” Wass said. “As a result, we are evaluating either ‘mothballing’ the Facility or dismantling the Facility and moving the combustion turbines and other usable equipment to other states. We are reluctant to pursue either of these options, because we believe that the Facility still has significant value to Florida as a proven, reliable generating resource.”

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.