A unit of Calpine (NYSE: CPN) is disputing at the Florida Public Service Commission not only Duke Energy Florida‘s plans for the 1,640-MW Citrus County combined-cycle power plant project, but also the utility’s plans to add capacity at two existing plants.
The Duke Energy Florida unit of Duke Energy (NYSE: DUK) on May 27 filed separate applications with the commission for approval of the new Citrus County gas-fired project, and for uprates of two existing plants. The uprates can be done more quickly to fill short-term needs, with Citrus County a longer-term project.
On May 30, Calpine Construction Finance Co. LP moved to intervene in both cases. 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, which is Citrus County. 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).
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 consists 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 said it was, at the end, the top bidder in the 2012 RFP
In its intervention petition for the uprates, Calpine said it was in the running in an RFP for capacity out of the Osprey Energy Center to fill the short-term (2016-2019) power needs of the utility. Calpine said it made the short-list in that 2012 RFP and entered negotiations to supply power after being picked as a winning bidder. In late 2013, Calpine said it was notified that its “refreshed” bid was the top bid that Duke Energy Florida had in hand.
“Subsequently, on April 29 , 2014, Calpine was advised that Duke intended to use its self-build options – the Suwannee Peakers and the Hines Chillers – to meet its need,” Calpine said in the May 30 filing.
Calpine noted that it has submitted a transmission request to Tampa Electric that would enable Calpine to deliver the full 515 MW of capacity (508 MW after accounting for Tampa Electric’s loss factor) into Duke ‘s system on a firm basis.
Calpine said its Osprey Energy Center shares many of the same positive attributes as the two plants Duke wants to uprate, including that it is built and its costs are certain. Calpine said it can also transfer existing gas transportation contracts to Duke, so there is no uncertainty about them.
“If the Commission grants Duke’s Petition, that decision will directly determine Calpine’s substantial interests in that it will foreclose Calpine from meeting Duke’s identified need with power supplied from the existing Osprey Energy Center,” Calpine wrote. “In short, such a decision would directly and adversely affect Calpine’s interests in operating the Osprey Energy Center by foreclosing a business opportunity and by duplicating the capacity of the existing Osprey Energy Center, an established, productive, useful, and reliable asset within the Florida bulk power supply grid.”
Two uprates due for operation in 2016 and 2017
Duke Energy Florida in its May 27 petition is seeking a PSC determination that it has a need for additional capacity prior to 2018 and that its Suwannee Simple Cycle and Hines Chillers Power Uprate projects are the most cost-effective alternatives to meet that need.
The Suwannee Simple Cycle project involves two dual-fuel F class combustion turbine generators that will be purchased and installed together with two generator step-up transformers to generate an estimated 320 MW. The Suwannee site has existing combustion turbines fired by gas and oil and existing steam units with supporting pipeline and transmission infrastructure.
The existing Suwannee steam units will be retired, thus modernizing the fleet and reducing the site environmental impacts.
DEF estimates that it will cost about $197m, including the Allowance for Funds Used During Construction (AFUDC), to build the Suwannee Simple Cycle project. The Suwannee Simple Cycle project is scheduled for commercial operation in June 2016.
The Hines Chillers Power Uprate project involves the installation of a chiller system on all four existing natural-gas fired, combined-cycle power blocks, Hines Units 1-4, located at the Hines plant in Polk County. Hines Units 1-4 are four 2×1 F class combined-cycle power blocks with a total installed capacity of about 1,900 MW. The chillers project will increase the summer capacity by approximately 220 MW.
The Hines Chillers Power Uprate project meets the company’s need for reliable capacity by the summer of 2017, the utility noted. The estimated cost of the project is $160m.