Arcadia files revised plan to upgrade emergency peakers in Wisconsin

Arcadia Electric Utility on Oct. 6 filed a revised application with the Public Service Commission of Wisconsin for approval to add air emissions controls on seven small, oil-fired generators used for emergency peaking purposes.

In revising an earlier application, Arcadia said that changes include a higher estimated cost, $650,000 as opposed to the prior $590,000 estimate, to do this project. It said it is final talks with a contractor for this work.

The project is to replace the aging exhaust systems that were installed in the 1956-2007 timeframe with new residential grade silencers and related equipment that includes diesel oxidation catalysts that are individually optimized for each generating unit. It will also include a crankcase ventilation system (CVS) plus a continuous monitoring system. The proposed equipment will reduce carbon monoxide (CO) emissions by 70%, and control emissions of total hydrocarbons, PM10, PM25 and odor causing compounds, and will include the required continuous catalyst temperature monitoring system as required by NESHAP.

The proposed replacement silencers are expected to be located in the exact position as those removed. The proposed replacement silencers are combination units, containing catalytic units, which will be accessible from the outside for cleaning and replacement.  

The impact on Arcadia’’s cost of operations associated with this project is projected to be a significant decrease over time. The alternative to this project would be to abandon the generation plant and purchase the needed capacity. The 20-year nominal purchased cost of the required capacity is estimated to be about $26.29 million (or about $14.73 million on a net present value basis) if the remaining un-depreciated balance of the abandoned generating plant is ignored.

Under the U.S. EPA’s current RICE rules, emergency generators that participate in emergency demand response programs are permitted to run up to 100 hours. Recent rulings by the D.C. Circuit Court of Appeals, however, have changed the RICE rules to eliminate the 100 hour exemption from NESHAP emissions standards. Loss of the 100 hour exemption means that as of May 1, 2016, the units will no longer be eligible to participate in the Midcontinent ISO‘s emergency demand response program, and therefore, no longer eligible to be counted as capacity resources for resource adequacy purposes.

Arcadia has local generation that consists of ten generating units ranging in size from 240 kW up to 3,090 kW of nameplate capacity. Although some units can be fueled by gas or diesel, they are all predominately fired using diesel fuel. For the past few years, in accordance with Arcadia’s wholesale power contract with Dairyland Power Cooperative, these units have been registered by Dairyland in the Demand Response Program of MISO as emergency generators, meaning they can be called upon by MISO or by Dairyland (as the applicable Local Balancing Authority) to respond to Level 2 system-wide emergencies. Under MISO tariff rules, the units are also eligible to be counted as capacity resources, enabling Arcadia to meet its resource adequacy obligations.

To address these recent court rulings and to insulate itself against future foreseeable emissions-related limitations, Arcaida has decided to add the necessary equipment to bring seven of its units into compliance with NESHAP requirements and remove the operational limits. This will ensure Arcadia’s continued ability to meet a significant portion of its resource adequacy obligations using its local generation. Units 2, 3 and 4, which are the smaller, older units ,will not be upgraded at this time, but will be kept in service in the event of a local emergency. Arcadia plans to undertake a study in the near future to consider adding more local generation capacity to meet its entire capacity need.