Calpine, Duke ready to rumble over Florida power plant issues

It looks like there will be some regulatory skirmishing between a unit of Calpine (NYSE: CPN) and the Duke Energy Florida unit of Duke Energy (NYSE: DUK) during a Florida Public Service Commission review of a 1,640-MW power project.

Duke Energy Florida (DEF) on May 27 sought approval from the commission of the Citrus County combined-cycle power project, to be located next to its existing Crystal River power plant. It will be several months before this case is decided.

On May 30, Calpine Construction Finance Co. LP moved to intervene in this case. Calpine said that it was a failed bidder in a 2013 Duke request for proposals (RFP) for power supply, which eventually ended with Duke picking its own self-build option, Calpine said it offered a power purchase agreement to Duke for power out of its Osprey Energy Center, which also included a free option in the third year of the PPA for Duke to buy the plant outright. Calpine noted that the 1,640-MW Citrus County plant is estimated to cost $1.5bn ($923/kW), while it offered to sell the Osprey Energy Center for about $300m (about $590/kW).

Calpine also said it is looking to “sharpen its pencil” and offer Duke an even more attractive sale price. It claimed that Duke never short-listed any bidders in the 2013 RFP, which deprived Calpine of a chance to make a “best and final offer.”

The Osprey Energy Center, which came on-line in 2004, has a capacity of 587 MW (winter), with a higher total of 675 MW (winter) if duct firing is included. It is composed of two Siemens 501FD combustion turbines, two heat recovery steam generators and one steam turbine. Power from the plant over the last 10 years has been sold to various Florida utilities, including Duke and Tampa Electric.

Calpine, incidentally, is the only outside power producer to have intervened in this case as of June 5.

On June 4, Duke filed a protest with the commission about what it called Calpine’s overly broad first set of data requests in this case. Duke didn’t say exactly what documents Calpine is looking for. “DEF generally objects to the Document Request to the extent that it call for documents protected by the attorney-client privilege, the work product doctrine, the accountant-client privilege, the trade secret privilege, or any other applicable privilege or protection afforded by law,” the utility wrote.

Duke has said the Citrus County plant will be a modern, natural gas-fired, combined-cycle plant with an expected summer rating of 1,640 MW and an expected winter rating of 1,820 MW when completed in December 2018.

“The Citrus County Combined Cycle Power Plant will enable the Company to meet the reliability needs of DEF’s customers, it will provide a superior source of efficient, cost-effective power to DEF’s customers during its life, it will expand the Company’s natural gas fuel supply diversity, and it adds flexibility to the energy production resources on the DEF system,” the utility said in the May 27 application. “There simply is no more cost-effective, viable generation resource to meet DEF’s capacity needs beginning in 2018 to provide reliable power to DEF’s customers.”

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.