Entergy Arkansas sees too many known unknowns to file a resource plan this year

Citing uncertainties in areas ranging from clean-air compliance for coal-fired capacity and a pending deal to buy an existing gas-fired unit, Entergy Arkansas Inc. (EAI) on May 1 asked the Arkansas Public Service Commission for a delay of up to one year on its Oct. 31 deadline to filed its latest Integrated Resource Plan (IRP).

Under the rules, this Entergy Corp. (NYSE: ETR) subsidiary has to file a new IRP every three years, with the next filing deadline coming up on Oct. 31 of this year. It on May 1 asked for a new deadline of no later than Oct. 31, 2016. “The Company submits that good cause exists for granting this extension and respectfully requests expedited consideration of the Company’s Motion in order to avoid unnecessary expense and effort on this project by the Company and its Stakeholders,” EAI wrote.

Currently, there are several anticipated or pending proceedings before the commission that will greatly influence EAI’s incremental capacity needs and the supply-side and demand-side resources that may be available to address those needs. EAI anticipates that most, if not all, of these proceedings will be completed by the end of 2015, and the decisions arising from them will provide a much sounder foundation upon which EAI’s next IRP could be based.

One such proceeding is EAI’s upcoming transition program plan filing for energy efficiency programs to be filed in June 2015. Although this filing only represents a transition year, EAI’s anticipates that its June 2015 filing will largely reflect the programs and budgets contemplated for EAI’s subsequent multi-year program plan filing due to be filed June 1, 2016.

With respect to supply-side resources, EAI has two dockets currently pending where it is seeking to add long-term resources to its portfolio.

  • In one docket, EAI has requested approval to purchase Power Block 2, a 495-MW combined-cycle combustion gas turbine as well as associated common assets, at the Union Power Station located near El Dorado, Arkansas.
  • In another docket, EAI has proposed to add to its portfolio of supply-side resources a long-term purchase power agreement (PPA) associated with an 81-MW solar energy project to be located near Stuttgart, Arkansas.

Further, environmental regulations applicable to EAI’s generating units materially influence the outcomes of EAI’s IRPs. For several of these regulations, EAI expects there to be regulatory developments later in 2015 which may have a material influence on the IRP, including:

  • The U.S. Environmental Protection Agency is expected to issue later this year a final Federal Implementation Plan (FIP) relating to Regional Haze requirements for the coal-fired White Bluff and Independence stations, plus the oil/gas-fired Lake Catherine power plant;
  • The EPA has indicated that in the summer of 2015 it will issue its final Clean Power Plan establishing CO2 standards for existing sources under the Clean Air Act section 111(d);
  • The State of Arkansas is under a deadline of September 2015 to provide to EPA a proposed attainment designation for the one-hour SO2 National Ambient Air Quality Standard (NAAQS) for the areas around White Bluff and Independence; and
  • The EPA is expected to issue the final revised ozone NAAQS by Oct. 1, 2015.

“Having the final Regional Haze FIP, final Clean Power Plan, state SO2 attainment designation, and final ozone standard will provide greater clarity to EAI regarding reasonable assumptions to make for the operations and costs of EAI’s fossil-fueled generating units, particularly White Bluff, as well as, potentially, Independence,” said the May 1 filing. “It is possible for EAI to make various assumptions regarding the outcome of all of these pending and upcoming matters before the Commission, and EAI was required to do just that in connection with its 2012 IRP. However, in the current circumstances, the pending and anticipated matters should be resolved by the end of 2015, with the opportunity to have much more certainty regarding EAI’s portfolio of resources and future capacity needs, as well as its demand-side and supply-side options available to meet those needs, through a brief delay. Delaying EAI’s next IRP filing one year will mitigate the potential that additional information anticipated later this year could render EAI’s IRP out-of-date soon after it is filed. Accordingly, good cause exists to provide EAI with its requested extension of time.”

EPA under the regional haze rule proposing expensive controls for the coal plants

EPA on March 6 proposed regional haze SO2 and NOX Best Available Retrofit Technology (BART) determinations for Units 1 and 2, and SO2, NOX, and PM BART determinations for the Auxiliary Boiler of the Entergy White Bluff Plant. White Bluff Units 1 and 2 are identical tangentially-fired boilers with a maximum net power rating of 850 MW each. The boilers burn sub-bituminous coal as the primary fuel and No. 2 fuel oil or biofuel for start-up. EPA proposes that SO2 BART for White Bluff Units 1 and 2 is an emission limit of 0.06 lb/MMBtu on a 30 boiler-operating-day rolling average based on the installation of dry flue gas desulfurization (FGD) or another technology that achieves that level of control. It proposes to require compliance with this requirement no later than 5 years from the effective date of the final rule. EPA proposes that NOX BART for White Bluff Units 1 and 2 is an emission limit of 0.15 lb/MMBtu on a 30 boiler-operating-day rolling average based on the installation and operation of low-NOx burners/separated overfire air.

EPA also proposed a NOX BART determination for Unit 4 of the Lake Catherine Plant. Lake Catherine Unit 4 is a tangentially-fired boiler with a nominal net power rating of 558 MW. It is permitted to burn natural gas and No. 6 fuel oil. Entergy’s analysis states that Lake Catherine Unit 4 has not burned fuel oil since prior to the 2001-2003 baseline period, currently does not burn fuel oil, and that Entergy does not project to burn fuel oil at the unit in the foreseeable future. Therefore, Entergy’s analysis addresses BART for a natural gas firing scenario and does not consider emissions from fuel oil firing. EPA approved Arkansas’ BART determinations for Lake Catherine Unit 4 for SO2 and PM for the natural gas firing scenario in its March 2012 final action. So the only thing to address here is NOX, with EPA proposing that NOX BART for Lake Catherine Unit 4 for the natural gas firing scenario is an emission limit of 0.22 lb/MMBtu on a 30 boiler-operating-day rolling average based on the installation and operation of Burners out of Service (BOOS). BOOS is a staged combustion technique in which fuel is introduced through operational burners in the lower furnace zone to create fuel-rich conditions, while not introducing fuel to other burners. The removal of fuel from certain zones reduces the temperature and the production of thermal NOX. Additional air is then supplied to the non-operational burners to complete combustion.

Said EPA about Independence: “Specifically, the proposed FIP addresses the requirements for Best Available Retrofit Technology (BART) for those sources for which we did not approve Arkansas’ BART determinations, Reasonable Progress Goals (RPGs), reasonable progress controls and a long-term strategy, as well as the interstate visibility transport requirements for pollutants that affect visibility in Class I areas in nearby states. Specific to the reasonable progress controls requirement, we are proposing in the alternative two options for controlling the emissions from the Entergy Independence Plant that is not subject to BART. Under Option 1, we are proposing controls for emissions of SO2, and NOX. If we take final action on this finding, the source will be subject to controls for both pollutants. Alternatively, under Option 2, we are proposing controls for only emissions of SO2 for this planning period. In particular, we are soliciting comments on the alternate proposed Options 1 and 2.”

The Independence plant has two nearly identical coal-fired units (Units 1 and 2) with a nameplate capacity of 900 MW each. Units 1 and 2 are tangentially-fired boilers that burn sub-bituminous coal as their primary fuel and No. 2 fuel oil or bio-diesel as the start-up fuel.

Under the EPA-proposed options:

  • Under Option 1 for the Independence units, for the first planning period, EPA is proposing both an SO2 emission limit and a NOX emission limit of 0.15 lb/MMBtu on a 30 boiler-operating-day averaging basis based on the installation and operation of LNB/SOFA.
  • Under Option 2, the agency is proposing only SO2 controls for Independence Units 1 and 2 under the reasonable progress requirements.

In addition to options 1 and 2, EPA is also soliciting public comment on any alternative SO2 and NOX controls that would address the regional haze requirements for Entergy White Bluff Units 1 and 2 and Entergy Independence Units 1 and 2 for this planning period. This includes, but is not limited to, a combination of early unit shutdowns and other emissions control measures that would achieve greater reasonable progress than the BART and reasonable progress requirements proposed for these four units in this rulemaking.

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.