El Paso Electric looks to double capacity of new Texas gas plant

El Paso Electric (EPE) wants to add two additional gas-fired units of 88 MW each at its planned Montana power plant, located near El Paso, Texas, in order to meet future peaking load needs.

El Paso Electric (NYSE: EE) applied Sept. 6 at the New Mexico Public Regulation Commission (NMPRC) for a Certificate of Public Convenience and Necessity (CCN) for approval of Montana Units 3 and 4.

There are currently two identical generating units approved for this site. Montana Units 1 and 2 are scheduled to be in service for the peak seasons of 2014 and 2015, respectively.

If approved, Montana Units 3 and 4 are scheduled to be in service for the peak seasons of 2016 and 2017, respectively, and will serve as peaking and intermediate facilities.

EPE is also asking the New Mexico commission to approve a “Certificated Estimated Cost” for the Montana Units 3 and 4, which includes the estimated total cost of design, development and construction of the generating units for the utility.

EPE said it engaged in a competitive bidding process for new capacity resources through a Request for Proposals (RFP). EPE sought bids for 80 to 100 MW in 2014, 80 to 100 MW 2015 and 160 to 200 MW in 2016. Because EPE’s Generation Group participated by submitting proposed self-build projects, EPE said it utilized an Independent Evaluator to ensure that the process was fair and resulted in the selection of the most economic option for EPE’s system needs.

The winning bid was a self-build proposal for four units, with each unit to be an 88 MW simple cycle, gas-fired combustion turbine to be added at an undeveloped site east of El Paso, Texas. A CCN was granted for the first two units by the NMPRC in a 2012 case. The Sept. 6 application requests CCN approval for the second two of the four units planned for the Montana Power Station.

All four units would be made up of General Electric turbines

The proposed Montana Units 3 and 4 are based on the same technology as Montana Units 1 and 2, as well as Rio Grande Unit 9, which was recently completed and for which EPE received CCN authorization in a 2010 case. All four are Montana units are planned to be General Electric LMS100 systems.

“The new units will be among the most efficient gas-fired units on EPE’s system,” the application said. “They each will operate primarily as a peaking facility but, because of their efficiency, they will also be used as intermediate units when the economics call for such operation. In addition, the aero derivative technology utilized in the units will provide other benefits such as a quick start capability (three minutes) and a relatively short time to achieve full power production (10 minutes). The Montana site has access to an existing natural gas pipeline.”

Most of the related transmission facilities required to maintain system reliability with the proposed generation at the Montana Power Station are required for Montana Units 1 and 2 in 2014 and 2015. For reliable interconnection of the expanded Montana Power Station for Units 3 and 4, one new 115-kV line will be needed.

The total cost for the Montana Units 3 and 4 generating project is estimated to be approximately $140.2m, excluding allowances for funds used during construction (AFUDC) and transmission. EPE estimates AFUDC to be $17.1m, for a total estimated project cost of $157.3m. The cost of related transmission upgrades and new facilities for expansion of the Montana Power Station for Units 3 and 4 is estimated to be in a range of $10.1m to $11.9m.

The average heat rate of Montana Units 3 and 4 operating in simple cycle is expected to be about 9,700 Btu per kilowatt-hour based upon a capacity factor of about 40%, compared to average heat rates of approximately10,457 Btu per kilowatt-hour for the company’s existing gas-fired generating units in 2012. As a result, EPE expects to realize fuel savings from Montana Units 3 and 4. Based upon a PROMOD operating simulation used to calculate the impact of Montana Units 3 and 4, total annual fuel costs are expected to decline about $2.3m in 2018, the first full year of operation for both units.

The last major unit EPE added to its fleet was Rio Grande Unit 9, which is an LMS100 gas-fired combustion turbine with a net summer capacity of 87 MW, located at the Rio Grande Generating Station in Sunland Park, N.M. It went into commercial operation on May 13 of this year. Prior to Rio Grande Unit 9, EPE built Newman Unit 5, which was completed in and has been commercially operational since April 2011. Newman Unit 5 is a 2×1 combined-cycle unit with a total of 278 MW of net summer capacity.

El Paso recently pushed back the retirement years for five exising units

Ricardo Acosta, EPE’s Director-Resource and Delivery Planning, said in accompanying testimony that the utility in April evaluated the feasibility of extending the lives of EPE’s local generating units, and by doing so determined that it could defer the addition of new generating units and the associated capital costs. Specifically, EPE extended the lives of five local generating units. There were no changes to the retirement dates for the gas-fired Rio Grande Unit 6 or the the ownership shares of the coal-fired Four Corners units.

The prior and new retirement years for the units are:

  • Rio Grande 6 (gas), 45 MW, prior retirement year 2014, current 2014;
  • Rio Grande 7 (gas), 46 MW, prior 2017, current 2020;
  • Newman 1 (gas), 74 MW, prior 2019, current 2022;
  • Newman 2 (gas), 76 MW, prior 2015, current 2023;
  • Newman 3 (gas), 97 MW, prior 2019, current 2024;
  • Newman 4 CC (gas), prior 227 MW, prior 2017, Phased-Out;
  • Newman ST1 (gas), 83 MW, no prior year, current 2021;
  • Newman CT1 (gas), 72 MW, no prior year, current 2022;
  • Newman CT2 (gas), 72 MW, no prior year, current 2023;
  • Four Corners 4 and 5 (coal), 108 MW, prior 2016, current 2016.

Acosta noted that while Montana Units 1-4 will have gas as their main fuel, they will all be dual-fuel capable and could burn oil. “The expense of having added flexibility in terms of fuel supply is a relatively small additional cost given the overall cost of the units,” he said.

EPE is currently engaged in permitting and licensing for the air permitting aspect of the MPS. EPE’s selected engineering firm, Worley Parsonsbegan working on the engineering deliverables in February 2012, and EPE finalized a contract with GE to purchase the LMS100 units in March 2012. Units 3 and 4 were purchased with dual-fuel combustors. The engineering specifications are part of the bid package to procure the units’ balance of plant (BOP) equipment and services. Worley Parsons, in collaboration with EPE, issued RFPs for procurement of the BOP equipment in the third quarter of 2012. The procurement of the BOP equipment for MPS Unit 3 and Unit 4 will be completed in the third quarter of 2015 and third quarter of 2016, respectively.

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.