The Interstate Power and Light unit of Alliant Energy (NYSE: LNT) on April 3 again asked the Iowa Utilities Board for quick approval of a waiver needed for a $39 million oil-to-gas conversion project.
On Feb. 20, Interstate Power and Light (IPL) filed with the board a petition for waiver and request for expedited treatment with respect to converting the fuel source of three, 63-MW combustion turbine (CT) units located in Marshalltown, Iowa. On March 2, the Office of Consumer Advocate (OCA) filed an objection.
The OCA said that first, IPL committed to build Marshalltown Generation Station (MGS) in its 2012 Integrated Resource Plan (IRP), but that plan did not address the CT fuel conversion. Neither did IPL’s 2013 and 2014 IRPs. “The issue is new and needs appropriate review and analysis,” the OCA added. “Second, IPL estimates the cost of the ‘fuel conversion and associated overhaul work’ to be approximately $39 million. This would be significant alteration. OCA and the Board have an obligation to assess the reasonableness and impacts of the proposed project before allowing the project to proceed. Third, the proposed conversion raises complicated issues not amenable to expedited review. To assess this proposed project OCA staff needs to consider many complicated issues related to IPL’s generation resource planning. OCA staff will require time for discovery and analysis. Fourth, IPL has not justified expedited proceedings.”
In preparation to build its gas-fired Marshalltown Generation Station (MGS), IPL obtained air permits from the Iowa Department of Natural Resources (IDNR). As a condition to the operating air permits for MGS, the IDNR required that all generation at the site be fueled by natural gas before commercial operation begins at MGS. This means that the CTs must be: converted to run on natural gas by Q2 of 2017; or retired.
“The fuel conversion of the CTs is reasonable, based on a number of considerations,” the utility argued in the April 3 brief. “IPL hired two external contractors to evaluate the CTs. Based on this review, IPL believes that with the specific investments recommended by the contractors, the useful lives of the CTs should reasonably be expected to last another 20 years. The cost of the Facility fuel conversion and associated overhaul work is estimated at approximately $39 million, including contingency. IPL used this cost figure and an assumed remaining life of 20 years to evaluate the proposed fuel conversion against the retirement scenario.”
The MGS project is scheduled to begin commercial operations on or before April 1, 2017 and IPL intends to complete the CT fuel conversion and associated overhaul work on one unit at a time in an effort to minimize system disruptions. Consequently, to continue to meet peaking power, and existing capacity positions; and to comply with IDNR air permit requirements, commencing the Marshalltown CT fuel conversion and associated life extension efforts in the spring of 2015 and proceeding in an expedited fashion gives IPL more flexibility to cost-effectively manage the project, since only natural gas can be burned in the units by the scheduled MGS commercial operation spring 2017.
The CTs are located between IPL’s existing Sutherland Generating Station (SGS) and the MGS. The fuel conversion requires a new natural gas supply, including new dew point heaters, instrumentation, meters, regulators, valves, and piping, as well as the removal of the liquid fuel components on the CTs and their replacement with dual-fuel components so that water injection can be used in conjunction with the new fuel to reduce emissions. The CTs have an aero-derivative configuration, allowing them to start quickly and operate at low loads.
The new natural gas pipeline serving MGS will provide a reliable fuel supply to both the Marshalltown CTs and SGS. The pipeline is already sized to accommodate the operational needs of the converted CTs, so only a short lateral – that will be located entirely on IPL property – is required to connect the the CTs to the new MGS natural gas pipeline.