In 2016, Wisconsin Electric Power wants to push the Powder River Basin coal portion of a coal blend at one of the units at the Elm Road Generating Station (ERGS) to 80%, while holding the blend for PRB coal at the other unit at 40%, in part because the site can’t currently handle the higher level of coal tonnage involved with higher PRB levels at both units.
Wisconsin Electric Power is currently before the Public Service Commission of Wisconsin in a rate case. Mary L. Wolter, the Manager-Fuel Cost Planning for Wisconsin Electric Power, provided Oct. 29 supplemental testimony to the commission about the fuel cost aspects of that case.
“The 2015 approved fuel cost plan assumed a 40% PRB blend at both ERGS Units 1 & 2,” wrote Wolter. “For 2016 we have assumed that Unit 1 would continue at a 40% PRB blend and that there would be an increase in the average PRB blend at Unit 2 from 40% to 80%. This resulted in a decrease in forecast monitored fuel costs of $8.0 million.”
Both ERGS units, built a few years ago next to the existing Oak Creek coal plant, were designed to burn high-Btu Pittsburgh seam coal out of Northern Appalachia. But the utility lately has been bringing in more and more low-Btu PRB coal, which is cheaper, but requires the handling of a lot more tons of coal for the same heat input. Elm Road has 1,057 MW of capacity, while the adjacent Oak Creek plant, which has burned PRB coal in blends for year, is at 993 MW.
Wolter noted that the 2016 fuel cost plan was based upon five-year historical average equivalent forced outage rates (EFORs) for the five years 2010-2014 with the exception of ERGS, which was modeled in the 2016 fuel plan at 6%, and the Rothschild biomass plant, which was modeled at 5%, and the peakers, which have traditionally been modeled at 10%.
Asked about the 6% EFOR level for Elm Road, Wolter wrote: “Five years of historical actual data are now available for the first ERGS unit, so we anticipated using the most recent five-year average for ERGS Unit 1 as a proxy for the ERGS units in the 2016 forecast. However, the average EFOR of 17% during the first five years of operation was significantly higher than the 2% rate used in previous test year fuel filings and higher than the most recent years of actual operations now that the plant has been ‘broken in’ and is undergoing testing for burning both bituminous and Powder River Basin (‘PRB’) coals. For this fuel plan, we used 6% as the base EFOR for the ERGS units – the rate assumed for actual operation of the ERGS units with fuel flexibility in the more recent 2014 CA applications in Docket Nos. 5-CE-145 and 5-CE-14714. We believe this is a reasonable forecast of the operations of ERGS in the 2016 test year based upon recent experience and because it was adopted by the Commission in its approval of the fuel flexibility projects.”
Wisconsin Electric has made several adjustments to Wisconsin Electric’s units in the PROMOD computer model since the development of the 2015 fuel plan, including:
- the Valley Power Plant was converted from coal to gas for an entire year with updates to the forecast operating minimums for the units;
- the Milwaukee County Power Plant is modeled as “retired” given the pending sale of the plant and the anticipation that it will no longer provide energy into the Midcontinent ISO market;
- lower minimum run times and down times were added for Rothschild;
- one of the Presque Isle Power Plant coal-fired units in Michigan’s western Upper Peninsula is modeled as must-run instead of economic to reflect higher anticipated demand in the Upper Peninsula because the Empire iron ore mine is anticipated to be in service throughout 2016; and
- model restrictions in the form of “bid adders” were used to reduce forecast off-peak generation at Port Washington.
The commission has approved fuel flexibility projects for Elm Road and Oak Creek that will allow greater capability to bring in by train, stockpile and blend coal. Asked if those projects are expected to be completed in 2016, Wolter said: “No, they are not. Thus, despite the desire to maximize the potential benefits from fuel blending as quickly as possible, there are physical limitations to the amount of coal that can be physically processed at Oak Creek Power Plant (‘OCPP’) and ERGS.
“Until the fuel flexibility capital projects are completed, the Site Bulk Material Handling (‘SBMH’) facility that serves both OCPP and ERGS has physical limits as to the amount of coal that can be delivered and/or stored. SBMH can only reasonably expect to handle coal deliveries of about 7.5 trains per week on average. Allowing PROMOD to dispatch the OCPP and ERGS units without limits resulted in more than 7.5 trains per week forecast to be delivered on average. The 2015 plan assumed 7.5 trains per week delivered to SBMH.”
“Through an iterative process, varying bid adders were tested to determine the price at which PROMOD would limit the dispatch of OCPP and ERGS within the range of the targeted 7.5 trains per week. We were able to reduce the average number of trains per week to 7.6 with the addition of bid adders on the Oak Creek and ERGS units. Because of the lengthy processing time of the PROMOD model it was not possible to keep testing higher bid adders in order to reach the optimal 7.5 trains per week. We propose to include bid adders in the final 2016 fuel cost plan that will limit deliveries to SBMH to 7.5 trains per week after all of the other Commission-approved adjustments are accounted for in this proceeding.”
Elm Road, Oak Creek coal handling projects to be completed in the fall of 2017
Wisconsin Electric Power d/b/a We Energies on Oct. 14 filed a quarterly report with the Wisconsin commission that said construction started Aug. 25, with completion due in the fall of 2017, on coal handling projects at the adjacent Oak Creek and Elm Road power plants. We Energies, Madison Gas and Electric and WPPI Energy have been approved by the commission for a Certificate of Authority (CA) to upgrade various power block equipment at Elm Road to facilitate the use of sub-bituminous coals out of the Powder River Basin as a fuel source.
Wolter also supplied separate Oct. 29 testimony to the commission rebutting some witnesses in this rate case. Said Wolter in that testimony about ERGS blending: “[T]he actual PRB blend percentage year-to-date through September 30, 2015, has been just over 72%. However, this partial-year PRB blend percentage is not a valid indicator of the PRB blend that ERGS is able to burn on a sustained basis. In order to expedite testing, the test plan for 2015 was modified to test higher blends in order to more quickly identify limitations and plan necessary modifications. Further, the majority of the tests at higher PRB blends have been at reduced loads due to equipment and operational limitations that were encountered. Those equipment and operational limitations require resolution and further testing before the higher PRB blends can be sustainable. A number of equipment modifications are being done on Unit 2 during its 2015 planned outage including the installation of water cannons. Full optimization and tuning could take up to six months. It is, therefore, still uncertain – and perhaps unlikely – whether or not Wisconsin Electric will continue to achieve the 70% average throughout 2015 or 2016.”
Asked about testimony from Wisconsin Industrial Energy Group witness Sharon Hennings saying that contract commitments should be made for PRB and bituminous coal, Wolter responded: “It appears that Ms. Hennings is not familiar with Wisconsin Electric’s coal contracting practices. We believe that it would be imprudent to lock in quantities and prices for 100% of our coal deliveries in advance of any given year, much less one in which we are testing various blends of coal at a major generating unit in the fleet. We have only 50% of our bituminous coal for ERGS under contract for 2016, but also have additional coal volumes available from a proven seller subject to their ‘right to sell’ provision. We anticipate coal and coal transportation will be relatively easy to procure in the short term in this low price market so leaving quantities open for spot purchases is reasonable. We also anticipate 300,000 to 400,000 tons of bituminous coal to be on the pile at the end of this year for use in 2016, which Ms. Hennings appears to ignore in her analysis.”
Hennings suggested that Wisconsin Electric has sufficient PRB coal under contract to enable it to burn an 80% PRB blend. Asked if this is correct, Wolter added: “No, it is not. The PRB contracts for 2016 serve not only ERGS but also Oak Creek Power Plant and Presque Isle Power Plant. We are not contracted for 100% of PRB coal either. … It is prudent to leave room for flexibility. The forecasted coal usage is based upon normal weather, for instance. Any variability in actual coal deliveries, off-loadings and burns due to the economy, weather, gas and oil prices, transmission congestion, etc. could make coal inventory much more difficult to manage if 100% of all forecasted coal purchases and deliveries are fixed in advance.”