The U.S. Environmental Protection Agency’s proposed Clean Power Plan would about clean the state of Florida’s coal-fired capacity out of existence by the plant’s 2020 interim deadline, said James Frauen, the Vice President of Technical Services and Development at Seminole Electric Cooperative, at a March 11 Federal Energy Regulatory Commission technical conference on the plan.
Seminole is one of the largest, not-for-profit generation and transmission cooperatives in the country. Seminole’s primary generation resources include the coal-fired Seminole Generating Station (SGS) in northeast Florida and the natural gas-fired Richard J. Midulla Generating Station (MGS) in south central Florida. Seminole’s portfolio reflects a mix of technologies and fuel types, including purchases from renewable resources. The diversity in Seminole’s generation mix reduces exposure to changing market conditions, helping to keep rates competitive and to maintain reliability, Frauen noted.
Through EPA’s Clean Power Plan (CPP) modeling, EPA is proposing that Florida reduce its overall CO2 emissions by 38%. In order to achieve the 38% reduction, EPA projects that more than 90% of Florida’s coal-fired generation will need to be retired in order to achieve Florida’s interim and final CO2 reduction goals of 794 and 740 lb CO2/MWh, in 2020 and 2030 respectively. The retirements include Seminole’s 1,300-MW” coal-fired power plant.
“The delta between the interim and final goals is so slight that essentially all coal-fired units in the state will be forced to retire or significantly reduce emissions by 2020 to meet Florida’s interim goals,” Frauen wrote in his prepared remarks. “Florida’s final goals will allow only two coal-fired facilities (3 units in total) to remain in the state, each of which will be required to operate at significantly reduced capacities. Under the proposed targets, approximately 8,700 MW of coal-fired generation in Florida will be pre-maturely retired. This significant loss of coal-fired generating capacity within such a short time period will cause reliability impacts in the state.
“If the CPP moves forward as currently planned, new gas-fired generating units will need to be constructed to meet generation demand created by the loss of the state’s coal-fired facilities. The new gas-fired generating facilities, transmission infrastructure and gas pipelines cannot be permitted and constructed by 2020, even if started today, much less if started in several years when the EPA and State of Florida finalize their respective rule implementation plans.”
Coal can be stored in Florida for reliability purposes; natural gas can’t be
“Fuel diversity is especially critical for Florida given its geographic location, lack of native energy production capacity and limited electric transmission import capability,” Frauen wrote. “With the exception of a limited amount of electricity that can be transported into the state (2,800 MW firm), Florida is essentially an island that relies on generating units within the state to serve approximately 52,000 MW of load. Florida’s current electric reliability is dependent on electric generating units’ (‘EGU’) ability to import fuel supply for either immediate consumption, or to store it for consumption later. Coal is a storable fuel source in Florida while natural gas is not. Florida does not have the geological formations to store economically a material amount of natural gas underground. A substantial amount of coal-fired electric generation must remain in Florida to ensure some level of fuel diversity and the resulting reliability benefits. To remove more than 90 percent of coal capacity from Florida would obligate Florida to rely solely on ‘just in time’ inventory for nearly all of its fuel supply, with reliability consequences for any disruptions in the supply chain.
“Seminole believes it makes good business sense to have a diversified generation portfolio in Florida that includes coal, natural gas, and renewable energy. Fuel diversity reduces exposure to changing market conditions, helps keep rates competitive and provides much needed flexibility during extreme weather events such as hurricanes. Displacing existing coal-fired power plants, as proposed by the EPA, will lead to increased costs for consumers, will jeopardize reliability, and will place undue stress on gas and transmission infrastructure within the State. Florida will likely experience serious generation facility reliability issues due to a lack of gas supply. By EPA’s calculations, natural gas-fired combined-cycle (‘NGCC’) units will be required to produce more than 85 percent of Florida’s electricity in 2025; however, as stated above, this will likely be as soon as 2020.
“Although EPA’s proposal assumes adequate natural gas supply is available to all utilities to support the contemplated increase in gas-fired electric generation, this assumption does not account for fuel supply risks associated with the production, processing, storage, and transportation of natural gas supply to power plants in peninsular Florida. All of the natural gas consumed by EGUs in Florida is produced outside the state and imported via interstate gas pipelines. This supply originates from production regions very far away from the state (Oklahoma, Arkansas, north Louisiana, and south Texas) and is dependent on multiple interstate pipelines to reach Florida. Florida’s increased reliance on the ‘upstream’ pipeline network creates a new form of risk for the state that is not addressed by EPA’s proposal.
“To put this in perspective, the following conditions exist for the existing gas pipelines serving Florida: the Gulfstream Natural Gas System pipeline is fully subscribed and the Florida Gas Transmission (‘FGT’) pipeline has varying volumes of unsubscribed capacity posted on its website as of March 6, 2015. These range from 0 Dths/day in summer 2016 to approximately 110,000 Dths/day during the 2017-2021 period. Beginning November 1, 2021, and beyond, FGT has 139,000 Dths/day of unsubscribed capacity. This capacity would not be sufficient to serve Seminole’s generating needs in 2021 if we were to replace our 1,300 MW coal facility with natural gas units. It is easy to see that when other Florida utilities are required to take similar actions, there will be insufficient gas transportation capacity available in the state of Florida to support our required NGCC generation. A third natural gas pipeline is in the permitting process, but based on the project’s FERC filing, under Docket No.CP15-17-000 this pipeline is already subscribed for up to 93% of its 2021 capacity. EPA must provide ample time for EGUs to negotiate contracts for the requisite gas supply and transportation capacity and for the permitting and construction of the necessary pipeline infrastructure.”
He later added: “Seminole will suffer substantial harm as a result of EPA’s proposal through the early retirement of its coal-fired facility – consisting of two (2) 650 MW units. Seminole plans to operate SGS through 2045, at a minimum, and will lose more than 25 years of remaining useful life if the units are retired early. SGS generates more than 50 percent of the energy provided to our Members. SGS is equipped with state-of-the-art environmental controls and is one of the cleanest coal-fired facilities in the nation. Over the life of the facility, Seminole has been proactive in meeting regulatory requirements and has invested more than $530 million in environmental control technology at SGS, including more than $260 million of emission control equipment installed within the last nine years.”