Florida PSC approves Duke buy of Calpine’s Osprey power plant

On a unanimous vote, the Florida Public Service Commission on July 21 approved a Duke Energy Florida buy of the gas-fired Osprey power plant of Calpine Construction Finance Co. LP as the best way to meet this Duke Energy (NYSE: DUK) subsidiary’s near-term power needs, with an expansion of Duke’s existing Suwannee gas-fired plant the fall-back option in case the Osprey buy doesn’t work out.

On Jan. 30, Duke Energy Florida (DEF) had petitioned the commission for a determination that Calpine Corp.‘s (NYSE: CPN) Osprey plant is the most cost-effective generation to meet DEF’s remaining need for additional generation capacity prior to 2018. In the alternative, if DEF cannot purchase the Osprey Plant, DEF asked for a determination that construction of its Suwannee Simple Cycle Project is the most cost-effective generation to meet DEF’s remaining need.

DEF initially petitioned the commission to determine that the Suwannee Simple Cycle Project and the Hines Chillers Power Uprate Project were the most cost-effective generation alternatives to meet that need. However, on the first day of the hearing in this case, DEF made a motion to withdraw its request with respect to the Suwannee Simple Cycle Project. Subsequently, DEF executed an Asset Purchase and Sale Agreement (APA) for the Osprey Plant. The Hines project was approved by the commission.

An administrative hearing to address DEF’s petition was held on June 3. Just prior to the hearing date, all of the parties proposed a stipulation of the issues in this case.

1,640-MW Citrus project would meet Duke’s beyond-2018 needs

In 2014, DEF applied with the commission to upgrade its Suwannee and Hines power plants to meet capacity needs out to 2018, and to build the 1,640-MW Citrus combined-cycle gas plant next to the existing Crystal River coal/nuclear plant to meet its beyond-2018 needs. As part of a settlement with parties to the case, the commission approved last fall the Hines and Citrus projects, plus the Osprey acquisition, but only if Duke could reach an acceptable agreement with Calpine on that purchase.

The Osprey Plant (also called the Osprey Energy Center) is a natural gas-fired, combined cycle facility located in Auburndale, Polk County, Florida. It began commercial operation in 2004. It produces approximately 534 MW on a base load basis and up to 599 MW (nominal) with additional peaking capacity.

Duke said in a May 6 pre-hearing brief that the company’s current and projected customer and peak demand growth, and its existing and planned plant retirements and generation plant capacity reductions, demonstrate a need for additional generation capacity in the summer of 2017. It added: “DEF needs either the Osprey Plant or, if DEF cannot purchase the Osprey Plant, the Suwannee Simple Cycle Project to meet its remaining need for additional generation prior to 2018.

“Another driver in DEF’s need for additional generation is the retirement of or reduction in generation capacity on DEF’s system including the retirement of its Crystal River Unit 3 nuclear power plant, which accounted for approximately 790 MW of summer generation capacity on DEF’s system, and planned retirements of some of DEF’s oldest and least efficient plants. Additionally, the Company’s plan for compliance with the United States Environmental Protection Agency (‘EPA’) Mercury and Air Toxics Standards Rule (‘MATS’) at Crystal River Unit 1 and Crystal River Unit 2 will result in a reduction in their capacity of approximately 130 MW beginning in the spring of 2016. DEF still needs the Osprey Plant or, alternatively, if DEF cannot purchase the Osprey Plant, the Suwannee Simple Cycle Project by the summer of 2017 to meet its 20 percent Reserve Margin Commitment. The Company’s remaining need for additional generation capacity is now approximately 180 MW in the summer of 2017, growing to over 300 MW in the summer of 2018.”

Duke has air permitting in hand for Suwannee project, if needed

The Florida Department of Environmental Protection on April 28 issued a final air construction permit to Duke Energy Florida covering the installation of two nominal 178-MW simple cycle combustion turbines (CTs) at the Suwannee River Power Plant to provide additional peaking resources at the facility. The new CTs would be designated Units P4 and P5. The Suwannee River Power Plant is located within the city of Live Oak in Suwannee County, Florida.

The Suwannee River Power Plant is a nominal 345-MW facility comprised of three fossil fuel-fired steam generators (Boiler Nos. 1, 2, and 3) and three combustion turbine peaking units (CTP Unit Nos. 1, 2, and 3). Boiler Nos. 1, 2, and 3 began operation in 1953, 1954, and 1956 respectively while CTP Units Nos. 1, 2 and 3 began operation in October 1980. The current CTP units generate 189 MW with the boilers contributing 156 MW.

Said the final air permit: “DEF proposes to construct two nominal 178 MW natural gas-fueled General Electric (GE) 7FA.03 model simple cycle combustion turbines (CT) and ancillary equipment. The ancillary equipment will include: two new natural gas‐fired fuel gas heaters, a new emergency diesel fire pump, a new 2.5 million gallon double‐wall fuel oil storage tank, as well as four new circuit breakers and miscellaneous natural gas piping components. The fuel for these two CTs will be natural gas with 2 grains sulfur per 100 standard cubic feet (2 g S/100 scf) as the primary fuel and ultra-low sulfur distillate (ULSD) fuel oil with 0.0015% sulfur as a limited backup fuel. Natural gas will be delivered to the site by the existing pipeline; however, new piping components will be installed to deliver the fuel to the specific area where the new CT will be located. ULSD fuel oil delivery will be by truck.

“The project includes the permanent shutdown of fossil fuel steam Boiler No. 3,” the DEP added. “Its shutdown date will be commensurate with the commercial operation of the new units. During the initial startup and shakedown of the CT peaking Units P4 and P5, the existing Boiler No. 3 may continue to operate.”

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.