Minnesota Power settles New Source Review cases with state, feds

Minnesota Power, a division of ALLETE Inc. (NYSE: ALE), said July 16 that it has reached a settlement with the U.S. Environmental Protection Agency and the Minnesota Pollution Control Agency on alleged violations of the New Source Review provisions of the Clean Air Act.

The agreement does not include any admission of wrongdoing on the part of the company. Minnesota Power is one of many utility companies in the U.S. whose investments in electric generation facilities were reviewed as part of the EPA’s Coal-Fired Power Plant Enforcement Initiative that began in 1999 in the Clinton Administration. The initiative has resulted in more than 25 related settlements nationwide.

“The company has been in discussions with the EPA since 2008 to settle this matter to avoid costly litigation, in the best interest of our customers and other stakeholders,” said ALLETE Senior Vice President, General Counsel and Secretary Deb Amberg. “We are pleased to have reached a settlement that recognizes the significant investments we’ve already made to reduce emissions. It is consistent with our EnergyForward resource strategy to reduce emissions, diversify our energy mix and advance renewable energy.”

Since 2006, the company has invested or will invest more than $600m to reduce SO2, NOx, mercury and particulate matter emissions at its thermal generation facilities. Retrofits to comply with state and federal regulations at its two largest units – the coal-fired Boswell 3 and Boswell 4 – will result in a 90% reduction in mercury emissions. Many of the emission control measures were implemented during the six years of discussions to resolve the Notice of Violation (NOV).

“As a regulated utility providing an essential service, we must always take a long-range planning view to meet our electric customers’ needs in the most cost-competitive and reliable manner,” said Al Rudeck, Minnesota Power Vice President of Strategy and Planning.

As part of its EnergyForward strategy, the company has secured 600 MW of new wind capacity, dramatically growing its carbon emission-free renewable portfolio. By the end of 2014, Minnesota Power will be positioned to meet Minnesota’s renewable standard of 25% by 2025 – more than a decade earlier than required by law.

The settlement agreement covers Minnesota Power’s Boswell, Laskin, Taconite Harbor and Rapids Energy Centers and includes more stringent emissions limits than in current air permits at all affected units, and the option of refueling, retrofits and retirements at some units. It also includes the addition of 200 MW of wind energy.

Minnesota Power will also spend $4.2m over the next five years in conservation and clean energy projects benefitting local communities, which could potentially include a forest restoration project, an electric car charging station in northeastern Minnesota and a 1-MW solar installation on Fond du Lac Band of Lake Superior Chippewa property. The company will pay a $1.4m civil penalty.

Settlement negotiations resulted in a consent decree filed with the U.S. District Court for the District of Minnesota. Before it will be effective, the settlement must be approved by the court after a 30-day public comment period.

EPA says this deal will clear a lot of air

EPA said July 16 that it expects that the actions required by the settlement will reduce harmful emissions by over 13,350 tons per year, which includes approximately 8,500 tons per year of SO2. The company estimates that it will spend over $500m to implement the required measures.

“Reducing harmful emissions from large sources of air pollution is a national priority for EPA,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “By meeting some of the lowest emission rates in the country, Minnesota Power will continue to provide energy to communities across northeastern Minnesota, while at the same time, reducing sulfur dioxide and nitrogen oxide in the air, which can pose serious health risks.”

The settlement requires that the company install pollution control technology and implement other measures to reduce SO2, NOx and particulate matter emissions from its three coal-fired power plants, which include nine operating units, as well as a biomass-and-coal-fired cogeneration plant which provides power and steam to an adjacent paper mill. Among other requirements, the company must install control technologies and meet emission rates that will be among some of the lowest in the country for SO2 at its largest unit and for both SO2 and NOx at the second largest unit.

In addition, the company must retire, refuel, repower, or reroute emissions at five other units, and must meet emission rates and install additional control technologies at remaining units. The company also must comply with declining system-wide annual tonnage limits for both SO2 and NOx.

The plants affected are:

  • The Boswell Energy Center, consisting of four coal-fired units: Boswell Unit 1 (68 net MW), Boswell Unit 2 (68 net MW), Boswell Unit 3 (362 net MW), and Boswell Unit 4 (585 net MW), all located in Cohasset, Minn.
  • The Laskin Energy Center, consisting of two coal-fired units: Laskin Unit 1 (47 net MW) and Laskin Unit 2 (50 net MW), both located in Hoyt Lakes, Minn.
  • Two solid fuel cogeneration units at the Rapids Energy Center designated by Minnesota Power as Rapids Unit 5 (approximately 175,000 pounds of steam per hour and approximately 13 net MW of electricity) and Rapids Unit 6 (approximately 175,000 pounds of steam per hour and approximately 16 net MW of electricity) and currently co-located with the UPM (United Paper Mill) Blandin paper mill in Grand Rapids, Minn.
  • Taconite Harbor Energy Center, which consists of three coal-fired units: Taconite Harbor Unit 1 (79 net MW), Taconite Harbor Unit 2 (76 net MW), and Taconite Harbor Unit 3 (84 net MW), all located in Schroeder, Minn.

Coal retirement options litter the decision terrain for the utility

The decree generally calls for full operation of existing emissions controls for the various units. By no later than Dec. 31, 2015, Minnesota Power shall retire, refuel or repower Taconite Harbor Unit 3.

By no later than Dec. 31, 2018, Minnesota Power shall retire, refuel, repower, or reroute Boswell Unit 1 and Boswell Unit 2. “Reroute” means to reroute the flue gas from these two units through a flue gas desulfurization (FGD) device that treats the flue gas from such units and Boswell Unit 3. Commencing upon the date of entry of the decree and continuing thereafter, Minnesota Power shall continuously operate an FGD at Boswell Unit 3 such that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.030 lb/mmBTU. If Minnesota Power chooses to reroute the flue gas from Boswell Units 1 and 2, then Boswell Units 1, 2, and 3 have to achieve and maintain a combined 30-Day Rolling Average Emission Rate for SO2 no greater than 0.030 lb/mmBTU.

Commencing upon the date of entry of the decree and continuing until installation and continuous operation of the new FGD, Minnesota Power shall continuously operate the existing FGD device at Boswell Unit 4 such that the unit achieves and maintains both: a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.100 lb/mmBTU; and a 12-Month Rolling Average Emission Rate for SO2 no greater than 0.070 lb/mmBTU. No later than May 31, 2016, Minnesota Power shall continuously operate a new FGD  at Boswell Unit 4 such that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.030 lb/mmBTU.

Commencing upon the date of entry of the Consent Decree and continuing until the units are retired, refueled, or repowered, Minnesota Power shall continuously operate wet particulate scrubbers at Laskin Units 1 and 2 such that the units achieve and maintain a combined 30-Day Rolling Average Emission Rate for SO2 no greater than 0.200 lb/mmBTU.

Commencing upon the date of entry of the decree, Minnesota Power has to continuously operate a furnace sorbent injection (FSI) system at Taconite Harbor Unit 1 so that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.550 lb/mmBTU. By no later than Dec. 31, 2015, Minnesota Power shall continuously operate a dry sorbent injection (DSI) and/or an FSI system at Taconite Harbor Unit 1 such that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.300 lb/mmBTU.

As of the date of entry of the decree, Minnesota Power shall continuously operate an FSI system at Taconite Harbor Unit 2 so that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.450 lb/mmBTU. By no later than Dec. 31, 2015, Minnesota Power shall continuously operate a DSI and/or an FSI system at Taconite Harbor Unit 2 such that the unit achieves and maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.300 lb/mmBTU.

Commencing upon the date of decree entry and continuing until the unit is retired, refueled, or repowered, Minnesota Power shall operate Taconite Harbor Unit 3 such that the unit maintains a 30-Day Rolling Average Emission Rate for SO2 no greater than 0.700 lb/mmBTU. By no later than Dec. 31, 2015, Minnesota Power shall retire, refuel, or repower Taconite Harbor Unit 3.

Commencing upon the date of entry of the decree and continuing thereafter, Minnesota Power shall operate Rapids Units 5 and 6 such that each unit achieves and maintains a 12-Month Rolling Average Emission Rate for SO2 of no greater than 0.150 lb/mmBTU.

Minnesota Power needs to provide EPA and MPCA with written notification by no later than Dec. 31, 2014, regarding whether Taconite Harbor Unit 3 and Laskin Units 1 and 2 will be retired, refueled, or repowered. By no later than Dec. 31, 2015, Minnesota Power shall retire, refuel, or repower Taconite Harbor Energy Center Unit 3 and Laskin Energy Center Units 1 and 2. If Minnesota Power elects to refuel a Laskin unit or Taconite Harbor Unit 3 to natural gas, it is allowed to later add biomass as an approved fuel, as well.

Minnesota Power is to provide EPA and MPCA with written notification by no later than Dec. 31, 2016, whether it will retire, refuel, repower, or reroute Boswell Unit 1 and/or 2. By no later than Dec. 31, 2018, Minnesota Power shall retire, refuel, repower, or reroute Boswell Units 1 and/or 2.

Minnesota Power has to install and operate at least 200 MW (nameplate rating) of renewable wind energy in advance of its obligations under the Minnesota Renewable Energy Standard (RES). The commissioning of Minnesota Power’s Bison 2 and Bison 3 wind projects, with a total capacity of 210 MW, in December 2012 fulfills this requirement.

 

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.