Dynegy in good shape for MATS at Illinois coal plants

Except for Edwards Unit 1 in Illinois, which is due to be retired anyway, the coal-fired plants of Dynegy (NYSE: DYN) are in good shape in terms of compliance with the federal Mercury and Air Toxics Standards (MATS), which have an inital compliance deadline in April 2015.

“Given the air emission controls already employed, we expect that each of our Coal and IPH segment facilities except Edwards Unit 1 will be in compliance with the MATS rule emission limits without the need for significant additional investment,” Dynegy reported in its Aug. 7 Form 10-Q quarterly report. “We continue to evaluate the ability of Edwards Unit 1 to meet the MATS limits until such time as MISO allows us to retire the unit. We also continue to monitor the performance of our other units and evaluate approaches to optimizing compliance strategies.”

Edwards Unit 1 is a 90-MW coal-fired generator located in the Peoria area of Illinois. Based on an Attachment Y Notice of retirement, MISO notified Ameren in December 2012 that MISO had designated Edwards Unit 1 as an System Support Resouces (SSR) unit until the completion of needed transmission reinforcements in December 2016.

Also, Dynegy noted in the Form 10-Q that if the court-invalidated Cross-State Air Pollution Rule (CSAPR) were to be reinstated in 2015, Dynegy said it would not expect to incur any material capital compliance costs given the SO2 and NOx emission controls currently installed and operating on its affected facilities.

The Illinois Power Holdings (IPH) segment consists of five plants, totaling 4,062 MW. The Coffeen, Edwards, Duck Creek and Newton facilities are located in the Midcontinent ISO region. Joppa is located within its own control area, known as EEI. These are the plants bought in late 2013 from Ameren (NYSE: AEE).

The Coal segment, which pre-dates the Ameren deal, consists of four plants – Baldwin, Havana, Hennepin and Wood River – that are all located in Illinois in the MISO region and total 2,980 MW.

In January 2014, an environmental group filed a petition for review in the Illinois Fourth District Appellate Court of the Illinois Pollution Control Board’s (IPCB) November 2013 decision granting IPH a variance to extend the applicable compliance dates for state Multi-Pollutant Standards (MPS) SO2 emission limits through Dec. 31, 2019, subject to certain conditions. On Jan. 17, the company filed a motion to dismiss. On Feb. 24, the Appellate Court dismissed the appeal. On April 1, the environmental group filed a petition for leave to appeal that decision with the Illinois Supreme Court. On May 5, Dynegy filed an answer opposing review by the Supreme Court. “We believe the variance was properly granted and that the Appellate Court’s judgment dismissing the petition for review was proper,” Dynegy noted. “We will vigorously defend our position.”

In April 2013, environmental groups filed a citizen suit in the U.S. District Court for the Central District of Illinois alleging violations of opacity and particulate matter limits at IPH’s Edwards facility. The District Court has scheduled the trial date for February 2016.

In May 2014, Dynegy received an information request from the EPA concerning the Coal segment’s Wood River Station’s compliance with the Illinois State Implementation Plan and associated permits. “We responded to the EPA’s request and are currently unable to predict the EPA’s response, if any,” Dynegy noted.

Dynegy President and CEO Bob Flexon noted in prepared remarks for the company’s Aug. 6 earnings call that IPH had significant forced outages, cutting its capacity factor by about 10% during the second quarter of this year, but that steps are underway to fix the problems. Plant performance at IPH improved in June and July.

Flexon noted that the use of refined coal, which is coal with chemical additives to reduce smokestack emissions when that coal is burned, was added at Edwards in the second quarter of this year and is now in place at all of the IPH plants. Three of the four Coal segment plants are due to get refined coal capability by the end of the third quarter of this year, with Baldwin to get it in the fourth quarter.

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.