Alliant Energy (NYSE: LNT), which has Wisconsin Power and Light and Interstate Power and Light (IPL) as primary subsidiaries, reported in its Nov. 7 Form 10-Q report that it is pursuing various clear-air initiatives for coal-fired capacity.
In April 2013, Wisconsin Power and Light (WPL), along with the other owners of the coal-fired Edgewater and Columbia plants, entered into a Consent Decree with the U.S. Environmental Protection Agency and the Sierra Club to resolve claims relating to the coal-fired Edgewater, Columbia and Nelson Dewey plants, while admitting no liability.
In June 2013, the decree was approved by a federal court, thereby resolving all claims against WPL. Under the decree, WPL is required to install the following emission controls systems:
- Selective Catalytic Reduction (SCR) system for NOx control at Edgewater Unit 5 by May 1, 2013 (placed in-service in December 2012);
- SO2 scrubbers and baghouses at Columbia Units 1 and 2 by Dec. 31, 2014;
- Scrubber and baghouse at Edgewater Unit 5 by Dec. 31, 2016; and
- SCR system at Columbia Unit 2 by Dec. 31, 2018.
WPL is also required to fuel switch or retire Nelson Dewey Units 1 and 2 and Edgewater Unit 3 by Dec. 31, 2015, and Edgewater Unit 4 by Dec. 31, 2018. In addition, the decree establishes emission rate limits for SO2, NOx and particulate matter for Columbia Units 1 and 2, Nelson Dewey Units 1 and 2 and Edgewater Units 4 and 5. The decree also includes annual plant-wide emission caps for SO2 and NOx for Columbia, Edgewater and Nelson Dewey.
So far this year, Alliant has made progress on various fronts
Alliant Energy’s, IPL’s and WPL’s strategic plan focuses on their core business of delivering regulated electric and natural gas service in Iowa and Wisconsin. The Form 10-Q said that the strategic plan is built upon three key elements: competitive costs, safe and reliable service and balanced generation. Key strategic plan developments impacting Alliant Energy, IPL and WPL include:
April 2013 – WPL announced its current environmental compliance plans include installing an SCR at Columbia Unit 2 to reduce NOx. The SCR is expected to support compliance obligations for current and anticipated air quality regulatory requirements. WPL currently expects to file an application with the Public Service Commission of Wisconsin (PSCW) in the second quarter of 2014 for the SCR at Columbia Unit 2.
April 2013 – IPL and the Iowa Office of Consumer Advocate (OCA) filed a settlement agreement with the Iowa Utilities Board (IUB), resolving all issues between the parties regarding the appropriate rate-making principles for the gas-fired Marshalltown power project. In addition, the OCA agreed that IPL satisfied conditions precedent for rate-making principles. The proposed settlement agreement reflects IPL’s requested fixed cost cap of $700m, excluding AFUDC and transmission upgrade costs. Any costs incurred in excess of the cost cap are expected to be incorporated into rates if determined to be reasonable and prudent. IPL currently expects a proposed decision and order from the IUB in the fourth quarter of 2013. In November 2012, IPL filed for regulatory approvals to construct an approximate 600-MW natural gas-fired combined-cycle facility in Marshalltown, Iowa. In May 2013, IPL filed a request with the IUB to construct a pipeline for the transportation of natural gas to Marshalltown. The expected cost of the pipeline is included in IPL’s requested fixed cost cap of $700m.
June 2013 – WPL received an order from the PSCW approving an application to install a scrubber and baghouse system at Edgewater Unit 5 to reduce SO2 and mercury. WPL currently expects to begin construction of the project in 2014 and place it in service in 2016.
July 2013 – WPL filed an application with the PSCW for performance and reliability improvements at Columbia Units 1 and 2. WPL currently expects a decision from the commission regarding these improvement projects by the first half of 2014. Subject to regulatory approval of the projects and the timing of such approvals, WPL expects to begin construction in the first half of 2015 and place them in service by 2017.
November 2013 – Alliant Energy announced WPL expects to begin incurring capital expenditures in 2016 for a potential new generation investment. Options include conversion of an existing natural gas-fired facility from simple-cycle to combined-cycle, or the construction of a new resource. WPL plans to complete a feasibility study of resource options and file the necessary regulatory applications for approval of the selected resource option with the PSCW by the end of 2014. This need is in part based on long-term resource plans that include the retirements of the coal-fired Edgewater Unit 3 and Nelson Dewey Units 1 and 2 by December 2015 and the retirement or fuel switching to natural gas of Edgewater Unit 4 by December 2018.
Lansing coal unit retired in June, but other coal retirements pushed back
In June 2013, IPL retired the coal-fired Lansing Unit 3 (38 MW nameplate), which did not have a significant net book value. IPL recently extended the expected retirement date for the coal-fired Dubuque Units 3 and 4 (total of 67 MW nameplate) from 2014 to 2016. IPL believes extending the retirement date will help ensure reliability of electric service and is the most cost effective option for IPL to meet currently anticipated energy and capacity needs of its customers.
In February 2013, the IUB approved IPL’s most recent Emissions Plan & Budget (EPB), which includes emission controls projects for Ottumwa Unit 1 (scrubber and baghouse to be completed in 2014) and Lansing Unit 4 (scrubber to be completed in 2015). MidAmerican Energy’s most recent EPB has also been approved by the IUB, which includes emission controls projects for George Neal Units 3 and 4 (scrubbers and baghouses, to be completed in 2013/2014).
George Neal Units 3 and 4 are operated by MidAmerican. IPL owns a 28% interest in George Neal Unit 3 and a 25.695% interest in George Neal Unit 4.