Minnesota agency outlines air issues for Sherco Units 1 and 2

The Minnesota Pollution Control Agency (MPCA) says the U.S. Environmental Protection Agency could impose new air requirements at the coal-fired Sherburne County (Sherco) Units 1 and 2 in two ways.

The MPCA filed Oct. 1 comments at the Minnesota Public Utilities Commission regarding Xcel Energy’s (NYSE: XEL) Sherco Units 1 and 2 Life Cycle Management Study, which was submitted to the commission on July 1. That study outlined the various regulatory initiatives that could impact those units and recommended that they remain in Xcel’s long-term resource plan.

The MPCA said it generally agrees with Xcel Energy’s characterization that regulatory uncertainties related to the control of emissions from existing power plants are expected to be resolved in the next several years. In its study, Xcel Energy analyzed numerous scenarios, a number of which assumed the installation of selective catalytic reduction (SCR) technology at Sherco 1 and 2.

A few federal rulemakings expected to be completed in the next three to five years will affect the Sherco generating plant, the agency noted. That includes the bigger, newer Unit 3, which is just coming back from a nearly two-year-long maintenance outage.

One regulatory program likely to affect the need for and timing of the installation of additional air pollution controls are the federal rules to reduce regional haze and visibility impairments in National Parks and federal wilderness areas. The second rule will seek to control greenhouse gases (GHGs) from existing power plants. The MPCA agrees with Xcel that other federal rules are not likely to require further controls at Sherco 1 and 2.

There are two points where a decision could be made to install SCR for NOx control at Sherco 1 and 2.

EPA has been sued to force a determination as to whether air emissions, specifically NOx, from Sherco 1 and 2 contribute “reasonably attributable visibility impairment” (RAVI) to Voyageurs National Park. Should EPA determine that these units impair visibility under the RAVI program, Xcel Energy would be provided five years after the determination to install best available retrofit technology (BART), which plaintiffs in the lawsuit believe would be SCR, the agency noted.

“While the MPCA takes no position on Xcel Energy’s description of the merits of the lawsuit, the MPCA agrees that the time frame for installation of SCR controls is hard to assess, given that this determination would be made by EPA with an unknown timetable,” the agency added.

In addition, the U.S. Supreme Court will review a decision by the U.S. Court of Appeals for the D.C. Circuit that invalidated the Cross State Air Pollution Rule (CSAPR). Since CSAPR addressed sources regulated by the federal Regional Haze Rule, EPA also adopted a rule that established that compliance with CSAPR requirements would constitute compliance with BART requirements. If the U.S. Supreme Court reinstates CSAPR, then it is unclear what action EPA would take to resolve the RAVI lawsuit and attendant BART requirements, MPCA said.

Minnesota agency will do its own NOx review later this decade

The second point where SCRs on Sherco 1 and 2 would be evaluated is during the MPCA’s assessment of reasonable progress of the state’s regional haze state implementation plan (SIP). A progress report on reasonable progress toward visibility goals is due in late 2014. By 2018, the MPCA is required to revise the SIP to include additional reductions if necessary to achieve reasonable progress towards visibility goals. If the MPCA finds that Minnesota is not making reasonable progress, then additional controls, such as SCRs at Sherco 1 and 2, may be required.

Given the unknown outcome and timing of the decisions related to Regional Haze and visibility impairment, the MPCA said it believes that Xcel’s estimated time frames (2018-2019 and 2023-2025) for SCR installations are reasonable.

The most significant rulemaking likely to affect Sherco 1 and 2 is EPA’s intention to adopt standards of performance addressing emissions of CO2 from existing power plants. Because EPA will use its authority under Section 111(d) of the Clean Air Act, the effort is being referred to as the “111(d) standards.”

President Obama has directed EPA to propose the 111(d) standard for existing facilities by June 2014 and to issue final standards by June 2015.

Minnesota achieved a 13% reduction in CO2 emissions from its electricity generating system from 2005 to 2010 and it remains to be seen whether Minnesota’s current and future GHG emission reduction goals will be sufficient to meet EPA’s 111(d) standards, the agency said. In its communications regarding potential 111(d) standards, EPA has indicated that it hopes to allow states flexibility, including the opportunity to take into account past actions, such as renewable portfolio standards or other clean energy programs that have reduced GHG emissions. At this time, the MPCA said it is unable to determine the degree of CO2 reductions the standards will require, the latitude allowed in creating equivalent programs, or the timing allowed in achieving the reductions.

The Sherco facility in Becker, Minn., is the company’s largest power plant in the Midwest, with its three units capable of providing a total of 2,400 MW. Units 1 and 2 have a production capability of 750 MW each and provide about 20% of the electricity used by Xcel’s Minnesota customers each year.

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.