After unsuccessfully challenging the U.S. Environmental Protection Agency all the way to the U.S. Supreme Court, Oklahoma Gas & Electric on Aug. 6 filed an application with the Oklahoma Corporation Commission for approval of a plan to be in compliance with federal environmental mandates.
OG&E’s filing calls for adding two SO2 scrubbers to the coal-fired units at the Sooner Power Plant near Red Rock, converting two coal-fired units at the Muskogee Power Plant to natural gas and replacing the natural gas units at the Mustang Power Plant.
“These efforts accomplish four key objectives,” said Paul Renfrow, the utility’s Vice President of Public Affairs and Corporate Administration. “First, they put the Company into compliance with the federal regulations. Second, they preserve fuel diversity in our generation portfolio, which is so important for reliability and cost control. Third, they allow us to maintain some flexibility to deal with the uncertainty around future developments, and most importantly, they allow us to meet our objectives at the lowest reasonable cost to our customers.”
Renfrow added: “OG&E’s goal has always been to produce energy in an environmentally responsible way. In this case, we took exception to the methodology EPA was requiring for compliance. OG&E and the State of Oklahoma developed a much more cost-effective way to comply. Our approach would have been easier on customers’ pocketbooks, but EPA disagreed and we lost in the courts. We respect the process and now we are taking the necessary steps to be in compliance.”
OG&E’s plan to modernize Mustang calls for replacing existing natural gas steam units that were first installed in the late 1940s with 400 MW of new quick-start, natural gas-fired combustion turbines. The new turbines will better support both reliability and efforts to lower customer energy costs because they can be brought online in 10 minutes rather than the 10 hours it takes for the current units there. This feature makes the natural gas-fired combustion turbines particularly well suited to maximize the benefits of renewable energy and helps ensure the company’s required generation reserve margins are met. Replacing the Mustang units in 2018 allows OG&E to retire those older units in 2017 and still meet Southwest Power Pool (SPP) capacity requirements.
“The Mustang plant site has all of the necessary infrastructure, the workforce and the necessary environmental permits,” said Renfrow. “It only makes sense to modernize this plant so it can provide several more decades of use rather than spending more money to locate the combustion turbines at a different site.”
The deadline for OG&E to achieve environmental compliance is January 2019. “That may sound like a long time, but it’s not when you consider all the work that has to be done while still meeting our customers’ electricity needs during Oklahoma’s hot summers,” said Renfrow. “We can meet this deadline but we certainly won’t have any time to spare.”
OG&E is seeking approval to recover the costs associated with its compliance and Mustang modernization efforts. These capital costs are estimated to be about $1.1bn over a six-year period (2014-2019).
In the Aug. 6 application, the utility said that:
- to meet the SO2 emission requirements of EPA’s Regional Haze rule, OG&E will install dry scrubbers on both coal-fired units at Sooner. OG&E will also convert two of the three coal-fired units at Muskogee to natural gas and repower those boilers to accommodate that change in boiler fuel. The deadline for meeting these SO2 emission requirements is Jan. 4, 2019;
- to meet the NOx requirements of Regional Haze, OG&E will install low NOx burners with over-fire air systems on the four coal units affected by Regional Haze and on the three gas units at the Seminole Power Plant affected by Regional Haze. OG&E began installation of low NOx burner technology in the spring of 2013; and
- to meet the mercury emissions requirements of the federal Mercury and Air Toxics Standards (MATS), OG&E will install Activated Carbon Injection technology on its five coal-fired units (Sooner units 1-2, Muskogee units 4, 5 and 6) by April 2016.
This approach fits within the utility’s integrated resource plan
John Reed, the Chairman and Chief Executive Officer of Concentric Energy Advisors and CE Capital Advisors, said in Aug. 6 testimony filed by the utility in support of this air plan: “The Scrub/Convert environmental compliance plan addresses each of OG&E’s [integrated resource plan] IRP objectives. By definition, it will continue to ensure compliance with the SPP capacity margin requirements. From a cost perspective, the Scrub/Convert plan performs well under almost all cases, including the sensitivity and market price scenario cases. It preserves OG&E’s relatively (compared to many utilities) fuel diverse portfolio, addressing the risks of natural gas prices and future carbon regulation in a reasonable manner. Finally, the IRP maintains OG&E’s commitment to demand-side resources which helps achieve all objectives.”
Robert Burch, employed by OG&E as Director, Power Supply Services, noted in his Aug. 6 testimony that the Regional Haze Rule (RHR) affects four OG&E coal-fired units (Sooner Units 1 and 2 and Muskogee Units 4 and 5) and three gas-fired units (Seminole Units 1, 2 and 3). Muskogee Unit 6 was not in existence prior to August 1977 and therefore it is not affected by the RHR. The OG&E generation facilities affected by the RHR and/or MATS rules total approximately 4,000 MW. This equates to 63% of OG&E’s total owned fossil fuel generating capacity and about 52% of total 2013 megawatt hours (MWh) generated.
- The Sooner plant is located near Red Rock, Okla. It includes two steam units of nominally 500 MW each (Sooner Units 1 and 2). Both units fire sub-bituminous (low sulfur) coal as their primary fuel. Sooner Unit 1 became operational in 1979 and Sooner Unit 2 became operational in 1980. Coal supply for these units is obtained from mines in the Powder River Basin (PRB) of Wyoming.
- Muskogee is located near Muskogee, Okla. It includes three steam units (Muskogee Units 4, 5 and 6). The rated capacity for each of the units is nominally 500 MW. All three units fire sub-bituminous coal as their primary fuel. Muskogee Units 4 and 5 became operational in 1977 and 1978, respectively, and Muskogee Unit went operational in 1984. Coal supply for these units is the same as the Sooner units.
- Seminole is located northeast of Konawa, Okla. It has three steam eunits (Seminole Units 1, 2 and 3). Each of the units has a nominal rated capacity of 500 MW. Seminole Units 1 and 2 became operational in 1971 and 1972, respectively, and Seminole Unit 3 became operational in 1975. All three utilize natural gas as their fuel.
Burch said OG&E is currently evaluating bids from several vendors for supply and installation of CDS dry scrubbers and expects to finalize the cost by the end of 2014. OG&E’s plan is to install CDS on Sooner Units 1 and 2 and to convert Muskogee Units 4 and 5 to burn natural gas instead of coal. “This approach strikes a balance by meeting the requirements of the RHR while maintaining a level of fuel diversity, helping to insulate our customers from the volatility of fuel prices,” Burch noted.
The Sooner units are newer and by design more efficient than the Muskogee units, so they are getting the scrubbers. Also, the Sooner site was designed to enable additional units, making it more conducive to expansion and installation of the FGD scrubbers. Muskogee already has a portion of the natural gas infrastructure to support gas conversion and is designed to have gas in the facility. Adding gas to Sooner would necessitate a review and potentially major upgrades to support the safety requirements associated with natural gas operation.
With regards to gas conversion of Muskogee Units 4 and 5, Burch said that OG&E is in the process of selecting an architect-engineer (AE) to develop specifications for bidding this work. OG&E will then solicit requests for proposals (RFPs) from various vendors for equipment supply and installation. Its intent would be to perform evaluations of bids and award the project in advance of the RHR compliance date of Jan. 4, 2019.
OG&E has done testing of its coal units as recently as 2013 and will be in compliance with the MATS targets for PM and HCL. Therefore, no additional environmental control equipment is required for those pollutants. Activated carbon injection is planned for mercury control. Conceptual cost estimates were developed for the two Sooner units and the three Muskogee units for the activated carbon injection projects. The installed capital costs are estimated to be about $9.7m for the two Sooner units and $14.6m for the three Muskogee units.
Mustang to get about 400 MW of fast-start combustion turbines
Mustang is located on the west side of Oklahoma City in Oklahoma County. It has four steam units (Mustang Units 1, 2, 3 and 4). The approximate total generating capability is 460 MW. Mustang Units 1 and 2 became operational in 1950 and 1951, respectively. Mustang Unit 3 became operational in 1955 and Mustang Unit 4 became operational in 1959. The Mustang plant is the oldest plant in OG&E’s fleet.
OG&E engaged Burns and McDonnell (B&M), an engineering firm, to research and recommend retirement dates for OG&E’s older steam gas units to be used as a basis for planning. B&M recommended that an operating age of 65 years be used as a retirement date and that these dates represented a “maximum” expected life. Altogether, very few gas-fired units in the United States operate past 65 years, Burch noted. Based upon similar class/size of units, there are only 6 out of 58 operating units older than Mustang unit 3 operating today. There are no other units of a similar class/size that are older than Mustang unit 4 still in operation.
The Mustang units were originally designed for baseload operations. But in recent years, the Mustang units have run in more seasonable/mid-merit operation, which means they don’t run that much. With the integration of the OG&E fleet into the Southwest Power Pool (SPP) Integrated Marketplace (IM), the utility anticipates the Mustang units, with their relatively higher cost, to operate in the 5% capacity factor (CF) range and may see a much greater amount of cyclic and intermittent duty. The existing Mustang units, because of their design, are not well suited for this cyclic mode of operation, which will tend to greatly shorten their remaining useful life and further increase the risk of unplanned outages and “catastrophic” equipment failures.
In order to have the new combustion turbines (CTs) in service before the summer of 2018, OG&E needs to begin preparing the Oklahoma Department of Environmental Quality (ODEQ) application no later than December of 2014, Burch wrote. The amount of CT capacity OG&E can locate at the Mustang site is dependent on a netting process that involves the history of emissions at the plant over the 60 months prior to a complete permit application. Based on that emission history for the existing units, the ability to maximize the generation begins to decrease after July 31, 2015. If OG&E fails to have a permit application filed, reviewed and deemed complete by that date, the amount of replacement generation will also begin to decrease, Burch pointed out.
The new Mustang units would be simple-cycle CTs. Burch compared them to the utility’s Horseshoe Lake Units 9 and 10, which are similar to the planned Mustang units and have been called to start 54 times in the SPP IM from the market inception on March 1, 2014, to July 2, 2014, a period of just over four months. These same units averaged 63 starts per year over the previous three years, representing a two and one half times increase in the number of starts per year. The new Mustang units will increase the asset diversity of the OG&E fleet by increasing its CT capability from 176 MW to 576 MW.
OG&E is conducting a technology assessment to aid in its selection of the appropriate CT characteristics and size class. Based on OG&E’s technology selection, bid documents will be issued for competitive bidding by the end of the third quarter of 2014. This process will continue to refine the cost estimate for this project.
OG&E, a subsidiary of Oklahoma City-based OGE Energy (NYSE: OGE), serves more than 810,000 electric customers in Oklahoma and western Arkansas.