The Louisiana Public Service Commission (LPSC) is due to hold an April 29-May 1 hearing on a 2012 application by Cleco Power LLC for approval of cost recovery on over $100m in new air emissions controls for three solid-fuel units.
For compliance with the federal Mercury and Air Toxics Standards (MATS), Cleco wants to spend about $6m on an activated carbon injection (ACI) installation at Madison Unit 3, and about $100m in total on ACI, fabric filters and dry sorbent injection (DSI) at Rodemacher Unit 2 and Dolet Hills Unit 1. The 600-MW Madison Unit 3 (formerly known as Rodemacher Unit 3) is relatively new, so it needs little in the way of new air controls.
Cleco Power filed an April 22 pre-hearing brief with the commission, noting that the initial MATS compliance deadline is in April 2015. It said a one-year extension on that deadline is possible, though not certain, so it is basing its compliance schedule on the April 2015 deadline.
Cleco Power argued that this air compliance program is much cheaper for ratepayers than the $500m-$700m it would have to spend to replace this capacity with natural gas combined cycle (NGCC) capacity.
Commission staff on April 21 filed a brief generally supporting the Cleco application, saying that Cleco’s cost estimates “appear to be reasonable.”
The Sierra Club on April 21 filed an opposing brief, saying there are cleaner alternatives to the Cleco Power plan and that the company didn’t offer any real evidence on alternatives like switching its coal capacity to natural gas, buying existing gas plants, or getting power off of the Midcontinent ISO market.
The units in question are:
- Rodemacher Unit 2 is a 523-MW coal/natural gas generating unit at Cleco Power’s plant site in Boyce, La. Cleco Power has a 30% ownership interest in the capacity of Rodemacher Unit 2.
- Dolet Hills Unit 1 is a 650-MW lignite/natural gas unit at a plant site in Mansfield, La. Cleco Power has a 50% ownership interest in the capacity of Dolet Hills.
- Madison Unit 3 is a 600-MW solid-fuel unit at Cleco Power’s plant site in Boyce, La.
All three units use coal as fuel
Said Cleco Power in its Feb. 25 Form 10-K annual report: “Cleco Power uses coal for generation at Rodemacher Unit 2. Cleco Power has an agreement with Cloud Peak Energy to provide the majority of Cleco Power’s coal needs at Rodemacher Unit 2 through 2014. Negotiations for a new contract are expected to be initiated in the spring of 2014. The coal supply agreement is fixed-priced for each year of the contract and provides for the full requirements to support Cleco Power’s minimum planned dispatch of Rodemacher Unit 2. Cleco Power actively manages its inventory levels throughout the year with spot purchases if necessary. With respect to transportation of coal, Cleco Power has an agreement with Union Pacific Railroad Company for transportation of coal from Wyoming’s Powder River Basin to Rodemacher Unit 2 through December 31, 2016.”
The Form 10-K added: “Cleco Power uses a combination of petroleum coke and Illinois Basin Coal for generation at Madison Unit 3. Petroleum coke is a by-product of the oil refinery process and is not considered a fuel specifically produced for a market; however, ample petroleum coke supplies are produced from refineries each year throughout the world, particularly in the Gulf Coast region. During 2013, Cleco received the majority of its petroleum coke supply from refineries located along the lower Mississippi River. Cleco purchased slightly over one million tons of petroleum coke during 2013 and the majority of the petroleum coke purchases were in accordance with existing contracts ranging in terms of three to five years ending December 31, 2014. Negotiations for new contracts for 2015 and beyond are ongoing. … During 2013, Cleco purchased approximately 150,000 tons of Illinois Basin Coal from Foresight Coal Sales and approximately 420,000 tons from Knight Hawk Coal, LLC. Cleco’s agreement with Foresight Coal Sales, LLC was for delivery of 130,000 tons during the fourth quarter of 2013. The remaining contract of 20,000 tons was delivered in January 2014.”
As for the third unit, the Form 10-K says: “Cleco Power uses lignite for generation at the Dolet Hills Power Station. Cleco Power and [Southwestern Electric Power] each own an undivided 50% interest in the other’s leased and owned lignite reserves within the Dolet Hills mine in northwestern Louisiana.”
The Form 10-K said about the status of the MATS-compliance projects: “Cleco Power has selected the equipment and work has been initiated at both Dolet Hills and Rodemacher Unit 2, with work at Madison Unit 3 expected to begin in the second quarter of 2014. Work on Dolet Hills is anticipated to be in service by May 2014. Work on Rodemacher 2 is anticipated to be in service by November 2014. Cleco Power filed an application with the LPSC in August 2012, requesting authorization to recover the revenue requirements associated with the MATS equipment. The LPSC proceeding is currently in the discovery phase. The MATS project is expected to cost $265.0 million, of which Cleco Power’s portion is $111.3 million. As of December 31, 2013, $133.1 million has been spent on the project, of which Cleco Power’s portion was $57.2 million.”