FERC tells EPA that Oklahoma coal unit needed for an extra year before it’s retired

In an advisory opinion for the U.S. Environmental Protection Agency, the members of the Federal Energy Regulatory Commission on April 16 said that coal-fired capacity of the Grand River Dam Authority needs a special Mercury and Air Toxics Standards (MATS) compliance extension, to April 2017.

MATS, which has an initial compliance deadline of April 16 of this year, allows the states to grant a one-year compliance extension to April 2016. Then, if the affected unit is particularly need for grid reliability purposes, EPA can grant another one-year extension, to April 2017.

On Feb. 19, the Grand River Dam Authority (GRDA) submitted a request to the Environmental Protection Agency seeking an administrative order to allow GRDA additional time to comply with MATS. GRDA also submitted a copy of the request to FERC.

EPA states 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.

GRDA requested an EPA administrative order to allow it to continue operation of its Grand River Energy Center (GREC) Unit No. 1 for a one-year period, from April 16, 2016, to April 16, 2017. Unit No. 1 is a 490-MW coal-fired steam turbine unit located near Chouteau, Oklahoma. GRDA said the administrative order will allow GRDA to complete the construction of the new combined cycle Unit No. 3, which will not be operational until just prior to April 16, 2017.

GRDA, a load serving member of the Southwest Power Pool (SPP), states that it will be unable to meet its required reserve margin if Unit No. 1 is retired before new Unit No. 3 becomes operational. Specifically, GRDA maintains that the retirement of Unit No. 1 before Unit No. 3 becomes operational would result in GRDA not meeting the 12% capacity reserve requirement in SPP criteria. In a memorandum attached to GRDA’s submission, SPP concurred with GRDA’s reserve margin assessment.

GRDA also states that Unit No. 1 has been used for local voltage support, noting that “there were six instances in 2014 where the GRDA System Operator requested either additional capacitive or reactive voltage support from Unit No. 1 to address voltage problems on the transmission system.” In a letter attached to GRDA’s submission, SPP concurred that SPP “has observed, over the last year, the need to commit GRDA Unit 1 for relief from high voltages … [and that] SPP concurs with GRDA’s assessment regarding GRDA Unit 1’s criticality for reliability absent other system changes.”

Said the April 16 FERC finding: “The reliability of the Bulk-Power System depends in part on whether utilities meet an appropriate planning reserve margin. The SPP Criteria requires GRDA to maintain a 12 percent capacity reserve requirement. Based on our review of GRDA’s submission, we find that the loss of GRDA’s Unit No. 1 would result in GRDA falling below the 12 percent capacity reserve requirement stipulated in SPP Criteria 2.1.9 unless GRDA is able to procure replacement capacity for the unit and associated firm transmission service. Absent a significant change in future circumstances, our view is that GRDA’s Unit No. 1 is needed as requested by GRDA to maintain electric reliability per the EPA Policy Memorandum as described above.”

On Jan. 23, the Grand River Dam Authority officially broke ground on the new, 495-MW combined cycle gas plan at the Grand River site. The event marked the first time in over 30 years that the Authority began construction on a new electric generation project. The new unit, which will cost approximately $296 million to complete, will have the potential to be the most efficient combined cycle generator in the United States. GRDA is purchasing the unit from Mitsubishi Hitachi Power Systems Americas (MHPSA) and its components will be constructed in Savannah, Georgia.

Along with MHPSA, other major contractors/suppliers in the project will include Black & Veatch (owner’s engineer), Hitachi HVB (electrical equipment), Nooter/Eriksen (heat recovery steam generator) TIC/Kiewit (construction) and Enable Midstream (natural gas pipeline).

GRDA is Oklahoma’s state-owned electric utility and is fully funded by revenues from electric and water sales instead of taxes. GRDA’s power touches 75 of 77 counties in the state and serves as an important economic development engine for Oklahoma. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.