Dynegy allowed to amend Illinois petition related to trading of SO2 credits

The Illinois Pollution Control Board on May 7 granted a Dynegy Midwest Generation LLC motion to filed an amended version of its long-shelved petition related to trading of SO2 allowances.

Dynegy Midwest Generation (DMG) is seeking a variance from the multi-pollutant standard (MPS) that applies to several of its coal-fired power plants in Illinois (called the Dynegy MPS group). Dynegy specifically seeks relief from a prohibition against trading certain SO2 allowances. The Dynegy MPS group includes the following five coal-fired plants: Baldwin Energy Complex (Randolph County), Havana Power Station (Mason County), Hennepin Power Station (Putnam County), Wood River Power Station (Madison County), and Vermilion Power Station (Vermilion County, retired in 2011).

Dynegy filed its initial petition in June 2012. But that petition was put on hold as the parties waited out a court review of the U.S. Environmental Protection Agency’s Cross-State Air Pollution Rule (CSAPR). In April 2014, the U.S. Supreme Court upheld CSAPR. In December 2014, the U.S. EPA published notice of how it would proceed to implement CSAPR after the Supreme Court’s ruling.

On April 17 of this year, Dynegy filed a motion to amend its petition and for leave to file the amended petition attached to the motion. The board on May 7 granted the motion. The board directed the Illinois Environmental Protection Agency to file a recommendation as to the disposition of the amended petition by June 22. 

Dynegy stated that, due to the passage of time, certain changes to the petition are needed. Id. For example, Dynegy initially requested a variance applicable to allowances allocated for 2013 and 2014 and now requests a variance covering allowances allocated for 2015 and 2016.

The amended petition said: “As directly relevant to this Amended Petition, the principal emissions at DMG’s coal-fired power plants are SO2. DMG generally controls SO2 emissions at its coal-fired plants through the use oflow sulfur coal, i.e., Powder River Basin (‘PRB’) coal with a sulfur content less than 0.3 percent. DMG does not expect to use any different type of coal during the proposed variance period, nor will the variance change the hourly rate of PRB coal use at any of DMG’s units or affect the amount of PRB coal estimated to be used in the proposed variance period.

“In addition, to control SO2 emissions further, DMG has installed and is operating spray dryer absorbers (i.e., dry scrubbers) with fabric filter (i.e., baghouse) systems on each of the units at Baldwin (Units 1, 2, and 3) and Havana (Unit 6). DMG did not defer its plans to install dry scrubbers in light of the remand of the federal Clean Air Interstate Rule (‘CAIR’) in North Carolina v. EPA or the later temporary vacatur of the CSAPR. These dry scrubbers have significantly reduced DMG’s system-wide SO2 emission rate. For example, system-wide SO2 average emissions over the period of 2007-2010 were 46,776 tons per year; after installation and operation of dry scrubbers on the three Baldwin units and Havana Unit 6, system-wide SO2 emissions in 2013 were 17,972 tons, a 60 percent reduction. DMG has met the SO2 limitations of the MPS in 2013 and 2014 using these SO2 control measures.”

The petition later added: “DMG seeks this variance because surrendering, during the first two years of implementation of the CSAPR, a large quantity of CSAPR SO2 allowances with significant economic value generated by DMG’s significant capital investments in SO2 pollution control equipment deprives DMG of that significant economic value, causing DMG unreasonable hardship.

“Specifically, DMG seeks temporary relief from the requirement…that prohibits the sale or transfer of excess allocated SO2 allowances relative to the applicable MPS SO2 emission standard and the companion requirement that DMG surrender such excess SO2 allowances.”

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.