Kansas City Power & Light (KCP&L), a subsidiary of Great Plains Energy (NYSE: GXP), on Jan. 2 filed a rate increase request with the Kansas Corporation Commission (KCC) that is needed in part due to government-mandated environmental equipment upgrades at La Cygne, one of KCP&L’s largest and lowest cost coal-fired power plants.
This environmental project is required in order for La Cygne to continue operating after environmental regulations are effective in June 2015. Once the project is done in 2015, all of KCP&L’s large base-load coal units will be in compliance with current environmental rules and regulations.
Additional reasons for the proposed increase include infrastructure and system improvements that help maintain the overall reliability of KCP&L’s electrical system, such as upgrades to the Wolf Creek nuclear plant and the replacement of electric meters.
“We work to manage electricity costs and are focused on offering customers competitive electricity prices,” said Terry Bassham, President and CEO of Great Plains Energy and KCP&L, in a Jan. 2 statement. “However, our costs to serve Kansas customers have increased significantly over the last decade due in large measure to government mandates impacting our industry.”
The utility previously announced a rate increase request for its KCP&L Missouri service area in October 2015 and is required to file a rate request for its KCP&L Greater Missouri Operations Co. service area by early 2016.
Upgrades at the La Cygne power plant, the second largest coal-fired power plant in KCP&L’s system, are needed in order to comply with recent U.S. Environmental Protection Agency (EPA) regulations. La Cygne produces a significant amount of the electricity this region relies on and is also one of the lowest cost coal-fired power plants in KCP&L’s fleet.
The environmental upgrade project began in September 2011 and includes the installation of baghouses and wet scrubbers, a new chimney to serve both units, and a selective catalytic reduction system for one unit. All of this equipment helps reduce emissions, improve air quality, and further KCP&L’s commitment to providing customers cleaner energy. Construction is expected to be completed by June 2015, and is currently on schedule and at or below budget, the utility noted. Some of the costs associated with the La Cygne upgrades have already been recovered in previous rate cases.
A reliability investment that is a part of this rate increase request is the need for additional transmission lines. As more and more renewable electricity, like wind power, needs to get from rural to urban areas, the need for transmission lines is growing. More transmission lines create greater opportunity for lower cost power to reach customers, allow for additional mandated renewable energy to be transported and reduce congestion on the grid.
Two new scrubbers are included in the La Cygne air project
Robert N. Bell, employed by Kansas City Power & Light as Senior Director–Construction, said in Jan. 2 rate case testimony that La Cygne is comprised of two coal-fired units. Unit 1, a once through supercritical cyclone coal-fired boiler, is rated at 812 MW gross / 736 MW net. It was constructed in the early 1970s. Unit 2, a pulverized coal-fired boiler, is rated at 717 MW gross / 682 MW net. It was constructed in the mid-1970s. KCP&L owns 50% of La Cygne. Kansas Gas and Electric, a wholly owned subsidiary of Westar Energy, controls the other 50% share of La Cygne. KCP&L is responsible for operating both La Cygne units.
La Cygne Unit 1 currently has a wet scrubber, which is original to the plant, for removal of sulfur and particulates, Bell noted. Local coal has significantly higher sulfur content, around 4-6%, than southern Powder River Basin coal at around 0.25-0.90%. As the plant was originally designed to burn 100% of the higher sulfur content local coal, the scrubber was required to meet emissions limits in effect during the early 1970s. In May 2007, a selective catalytic reduction (SCR) system for NOx removal was installed on La Cygne Unit 1.
La Cygne Unit 2 currently has an electrostatic precipitator (ESP) for particulate removal. This equipment is at the end of its useful life. The La Cygne Environmental Project includes the installation of new ductwork to by-pass the ESP and to abandon the ESP in place in order to avoid the continued capital and maintenance expense to operate the ESP. ESP inlets and outlet sections must be removed for clearance of the new duct being installed under the ESP.
The La Cygne Environmental Project includes installation of wet scrubbers, baghouses, and a common dual-flue chimney for both La Cygne Units 1 and 2, and an SCR system, low-NOx burners (LNB) and an over-fire air (OFA) system for Unit 2. Construction began in September 2011 and the project is anticipated to be installed and operational by June 2015.
KCP&L, as the operating partner of La Cygne, is responsible for establishing and managing the schedule and budget for the project. The work is being done by La Cygne Environmental Partners, a joint venture formed by Kiewit Industrial Contractors and Sargent and Lundy which holds the engineer-procure-construct (EPC) contract for the project.
Darrin R. Ives, employed by Kansas City Power & Light as Vice President–Regulatory Affairs, testified that Wolf Creek refueling outage number 20 is expected to begin Feb. 28, 2015, and to be complete sometime in the second quarter of 2015. Certain plant additions will be completed during this outage.
Wolf Creek additions will include three major modifications to the Essential Service Water system during the 2015 spring refueling outage. The Essential Service Water system pumps lake water into the plant and would ultimately cool the plant, the spent fuel pool and the reactor in the event of an accident. Its operation would be critical to prevent a Fukishima type of event. Because the Essential Service Water system is filled with lake water, there is a large amount of corrosion on the original piping. These modifications are the next portions of replacement for this aging, original plant system. The original exterior piping of the Essential Service Water system has been replaced and was completed in the 2014 mid-cycle outage.