NRG Energy (NYSE: NRG) said in its Feb. 27 annual Form 10-K report that it is awaiting a final rule from the Maryland Department of the Environment (MDE) that will essentially determine the fate of much of NRG’s coal-fired capacity in the state.
In October 2014, the MDE released a draft of a proposed regulation regarding NOx emissions from coal-fired generating units. The MDE draft regulation was proposed in the Maryland Register in December 2014.
If finalized as proposed, the regulation would require by June 2020 the company at the three Dickerson coal-fired units and the Chalk Point coal-fired unit that does not have a selective catalytic reduction (SCR) system to: install and operate an SCR; retire the unit; or convert the fuel source from coal to natural gas. “The implementation of the MDE regulation could negatively affect certain of the Company’s coal-fired units in Maryland,” NRG added.
NRG is already moving to shut these coal units. In November 2013, it asked PJM Interconnection to clear the deactivation in 2017 of Dickerson Units 1-3 (182 MW apiece) and Chalk Point Units 1 and 2 (337 MW for Unit 1 and 341 MW for Unit 2). Said a PJM notation for each of those five units in the Feb. 23 version of its pending deactivation list: “On 5/2/2014 PJM received an updated deactivation notice with a new deactivation date of 5/31/2018. New reliability analysis complete. Upgrades identified and will not be completed until June 2020. Interim measures have been identified for 2018-2020 time period and unit can deactivate as requested on 5/31/2018.”
In a footnote in the Form 10-K, NRG Energy said about those requests: “On November 29, 2013, NRG submitted a notice of deactivation to retire Chalk Point Units 1 and 2, and Dickerson Units 1, 2, and 3 on May 31, 2017. The deactivation is based on draft environmental regulations that, if adopted, could require uneconomic capital investment and render the units uneconomic to operate going forward.”
Notable is that there is 1,690-MW of gas-fired capacity at Chalk Point and 312-MW of gas-fired capacity at Dickerson that is not affected by this decision-making.
Chalk Point Units 1-2 both have FGD scrubbers and electrostatic precipitators already installed, with Unit 1 having SCR and Unit 2 having selective auto-catalytic reduction (SACR). Dickerson Units 1-3 are all covered by FGD, selective non-catalytic reduction (SNCR) and fabric filters.
The Form 10-K noted another matter that is putting environmental pressure on these plants. “On January 25, 2013, Food & Water Watch, the Patuxent Riverkeeper and the Potomac Riverkeeper (together, the Citizens Group) sent GenOn Mid-Atlantic a letter alleging that the Chalk Point, Dickerson and Morgantown generating facilities were violating the terms of the three National Pollution Discharge Elimination System permits by discharging nitrogen and phosphorous in excess of the limits in each permit. On March 21, 2013, the MDE sent GenOn Mid-Atlantic a similar letter with respect to the Chalk Point and Dickerson facilities, threatening to sue within 60 days if the facilities were not brought into compliance. On June 11, 2013, the Maryland Attorney General on behalf of the MDE filed a complaint in the U.S. District Court for the District of Maryland alleging violations of the [Clean Water Act] and Maryland environmental laws related to water. The lawsuit is ongoing and seeks injunctive relief and civil penalties in excess of $100,000. The Company does not expect the resolution of this matter to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.”