MISO works out life-support deal for Coleman coal plant

The Midcontinent Independent System Operator (MISO) filed an updated agreement on Nov. 1 with the Federal Energy Regulatory Commission that will allow the coal-fired Coleman power plant of Big Rivers Electric to remain in operation for the time being.

Big Rivers Electric, faced with a massive loss of load from aluminum smelters in its service area, has plans to idle the Coleman plant, while it continues efforts to sell the plant itself or its capacity. The Kentucky Public Service Commission recently approved a rate case for the cooperative that includes consideration of a Coleman idling.

But, MISO said it needs the plant operational, at least for now, for grid reliability purposes. So it worked out a System Support Resource (SSR) deal with Big Rivers. Under the SSR, load serving entities in the regional power market essentially compensate Big Rivers for keeping the plant open while grid fixes are made.

Big Rivers owns the Coleman facilities located near Hawesville, Ky., in the northern portion of that state. These facilities include four generating units, the first three of which provide 443 MW of capacity that are the subject of this submission. Coleman has coal-fired steam boilers that were installed in the 1969-1971 period.

In December 2012, Big Rivers submitted an Attachment Y-2 (Request for Non-Binding Study Regarding Potential SSR Status) to MISO in order to assess the potential suspension of Coleman Units 1-3, beginning on Aug. 20, 2013, and resuming operations Jan. 1, 2015. MISO completed its analysis of the Attachment Y-2 request, identifying reliability issues associated with the suspension of these units, and MISO provided a response to Big Rivers on May 2, 2013. On May 24, 2013, Big Rivers submitted a letter to MISO indicating its desire to suspend Coleman for 28 months, and included an Attachment Y Notice that designated Sept. 1, 2013, as the beginning for the suspension.

Jeffrey Webb, MISO’s Senior Director of Expansion Planning, notified Big Rivers that Coleman would be designated an SSR unit until such time as appropriate alternatives could be implemented to mitigate reliability issues. MISO concluded that the proposed suspension of Coleman during the twenty-eight month suspension period, without curtailment of load by means of demand response, would result in violations of specific applicable reliability standards. As a result, MISO designated Coleman as an SSR unit.

Deal worked out for one-year SSR to begin Sept. 1 of this year

MISO began working with Big Rivers and the MISO Independent Market Monitor (IMM) to negotiate an appropriate SSR agreement. Big Rivers submitted a draft SSR for MISO’s consideration, and Big Rivers proposed a 12-month SSR for the period between Sept. 1, 2013, and Aug. 31, 2014. Big Rivers has voluntarily continued operating Coleman through the present time, MISO noted in the Nov. 1 application.

“The SSR status of Coleman is expected to continue until load curtailment arrangements by means of demand response from Century Aluminum, a smelter in the area near Coleman, are in place to adequately address possible transmission system overloads,” MISO added.

MISO said it annually review the SSR unit and grid characteristics to determine whether Coleman is still qualified to be an SSR. MISO also retains the right to terminate this SSR agreement prior to the end of the term by giving written notice to the participant.

Alternatives to the SSR agreement were reviewed in light of submission by Big Rivers of a request to suspend operations at Coleman. Transmission upgrades will not be in place before the return of Coleman to service, and therefore transmission upgrades are not planned for service after the SSR agreement terminates. Such termination could occur before the end date for the suspension if load curtailment arrangements are in place to adequately address possible transmission system overloads.

MISO wants this SSR agreement start to be retroactive to Sept. 1, since Big Rivers has voluntarily kept the plant in operation since that point. “Through the present date, Big Rivers has maintained the availability of the subject SSR Unit (i.e. Units 1-3 remained available to maintain system reliability) pursuant to MISO’s request, and Big Rivers incurred costs that would otherwise be covered by the rate contained in the SSR Agreement,” MISO said.

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.