The dual fuel (coal and gas) Sundt Unit 4 in Arizona is on the bubble when it comes to whether it will keep burning coal under the U.S. Environmental Protection Agency’s regional haze plan, said Tucson Electric Power parent UNS Energy (NYSE: UNS) in its Feb. 25 annual Form 10-K report.
Prior to 2010, Sundt Unit 4 was predominantly fueled by coal. But the unit also can be operated with natural gas. Both fuels are combined with methane delivered from a nearby landfill. Since 2010, Tucson Electric Power (TEP) has fueled Sundt Unit 4 with both coal and natural gas depending on which resource is most economic. In 2014, TEP expects to fuel Sundt Unit 4 primarily with existing coal supplies at the site.
In July 2013, the EPA rejected the Arizona state implementation plan (SIP) determination that Sundt Unit 4 is not subject to the best available retrofit technology (BART) provisions of the Regional Haze Rule and developed a timeline to issue a federal implementation plan (FIP) for emissions sources including Sundt Unit 4.
While TEP does not agree that Sundt Unit 4 is subject to BART, it submitted a better-than-BART proposal in November 2013 which called for the elimination of coal as a fuel source at Sundt by 2017, the Form 10-K noted. The EPA issued a BART proposal that would require TEP to either: install by mid-2017 selective non-catalytic reduction (SNCR) and other equipment if Sundt Unit 4 continues to use coal as a fuel source; or permanently eliminate coal as a fuel source as a better-than-BART alternative by the end of 2017.
TEP estimates that the cost to install SNCR and other necessary equipment would be about $12m, and the incremental annual operating costs would be $5m to $6m. TEP would be required to notify the EPA of its decision by July 31, 2015. The EPA is expected to issue a final BART determination by July 2014.
As of Dec. 31, 2013, the net book value of the Sundt coal handling facilities was $27m. If the coal handling facilities are retired early, the utility expects to request Arizona Corporation Commission approval to recover, over a reasonable time period, all the remaining costs of those facilities.
Sundt Unit 4 has about 120 MW of capacity on coal and about 156 MW on natural gas. The other three Sundt units are fired with a combination of gas and oil.
EPA on Feb. 18 proposed a FIP that finds that Sundt Unit 4 is eligible for and subject to BART. EPA is proposing BART emissions limits on Sundt Unit 4 for NOx, SO2 and PM10 based on these corresponding control technologies.
- For NOx, the agency is proposing an emission limit of 0.36 lb/MMBtu consistent with the use of SNCR.
- For SO2, it proposes an emission limit of 0.23 lb/MMBtu consistent with the use of dry sorbent injection (DSI).
- For PM10, the federal agency is proposing a filterable PM10 emission limit of 0.03 lb/MMBtu based on the use of the existing fabric filter baghouse.
- Finally, it is also proposing a switch to natural gas as a better-than-BART alternative.