The Federal Energy Regulatory Commission on Nov. 20 issued an order supporting a request by the Kansas City Board of Public Utilities to the U.S. EPA asking for more time to comply with the Mercury and Air Toxics Standards at a coal-fired power plant.
On Aug. 19, Kansas City Board of Public Utilities (BPU) submitted a request to the EPA seeking an administrative order, pursuant to Section 113(a) of the Clean Air Act (CAA), to allow BPU additional time to comply with MATS, which is due take initial effect in April 2015. BPU also submitted a copy of the request to the commission. Under CAA Section 112(i)(3)(B), some affected sources are eligible for a one-year extension of the compliance deadline, until April 2016.
EPA has said on a policy level that the analysis provided in an administrative order request should demonstrate “that operation of the unit after the MATS Compliance Date is critical to maintaining electric reliability, and that failure to operate the unit would: (a) result in the violation of at least one of the reliability criteria required to be filed with the Commission, and, in the case of the Electric Reliability Council of Texas, with the Texas Public Utility Commission; or (b) cause reserves to fall below the required system reserve margin.”
The EPA Policy Memorandum indicates that the EPA intends to seek advice, as necessary and on a case-by-case basis from FERC, among others, as the EPA decides whether it will grant an administrative order to an owner/operator. The EPA Policy Memorandum makes clear that the EPA decision as to whether to grant an administrative order to an owner/operator is solely the decision of the EPA and that the concurrence or approval of any entity is not a condition for approval or denial of an administrative order request.
BPU requested an EPA administrative order to allow BPU to continue operation of its Nearman Unit 1 for a six-month period, from April 16, 2016 to October 15, 2016. BPU states that the administrative order will allow BPU to complete the installation of air quality controls. BPU also offers to limit the operation of the Nearman 1 unit to one-third of its total annual production during this six-month period.
BPU noted that the Southwest Power Pool has not found any system-wide reliability risk under the NERC criteria standards should Nearman 1 not operate during the 2016 summer peak season. However, BPU states that the loss of the Nearman 1 unit would result in BPU not meeting the 12% capacity reserve requirement in SPP Criteria 2.1.9. BPU also states that transmission constraints in its local area “will make importing sufficient replacement energy very difficult and that, assuming sufficient replacement energy can be imported, the price will be so high as to impose a substantial burden on its residential customers, particularly those who are struggling financially.”
Said the Nov. 20 FERC order: “The reliability of the Bulk-Power System depends in part on whether utilities meet an appropriate planning reserve margin. BPU is responsible under the SPP Criteria for meeting a 12 percent capacity reserve requirement. Based on our review, we find that the loss of the Nearman 1 unit would result in BPU falling below the 12 percent capacity reserve requirement stipulated in SPP Criteria 2.1.9 unless BPU is able to procure replacement energy for the unit. Absent a significant change in future circumstances, our view is that the Nearman 1 unit is needed as requested by BPU to maintain electric reliability per the EPA Policy Memorandum as described above.”
Nearman Station consists of a 256-MW coal-fired Unit 1 and a 75-MW simple-cycle combustion turbine gas/oil peaking unit. Nearman 1 is getting a $250m air quality control project that will include a selective catalytic reduction system, an ammonia (urea) handling system, a circulating dry scrubber system, a pebble (hydrated) lime handling system, a byproducts handling system, a powdered activated carbon system, and a pulse jet fabric filter. The new controls are not expected to be ready for tie in with Nearman 1 until approximately October 2016 with the controls expected to become operational sometime in the late winter-early spring 2017.
Kansas City BPU noted in its Aug. 19 request that the coal-fired Quindaro Units 1 and 2 are being converted to burn entirely natural gas by April 2015, also to meet the MATS requirements. Qulndaro Unit 1 is a 78-MW facility, while Unit 2 is a 144-MW unit.