Xcel Energy (NYSE: XEL) said in its Feb. 19 annual Form 10-K report that its Southwestern Public Service (SPS) subsidiary plans to appeal a recent Federal Implementation Plan (FIP) from the U.S. Environmental Protection Agency under the regional haze program that requires the installation of dry scrubbers on its coal-fired Tolk plant.
“In January 2016, the EPA adopted a final rule establishing a FIP for the state of Texas,” said Xcel. “As part of this final rule, the EPA imposed SO2 emission limitations that reflect the installation of dry scrubbers on Tolk Units 1 and 2, with compliance required by February 2021. Investment costs associated with dry scrubbers could be approximately $600 million. SPS plans to appeal the EPA’s decision. SPS believes these costs would be recoverable through regulatory mechanisms if required, and therefore does not expect a material impact on results of operations, financial position or cash flows.”
In its Jan. 5 FIP, EPA responded to various complaints. For example, Xcel Energy tried to argue that any scrubbing at Tolk is impractical because of scarce local water supplies. “We conclude that Xcel’s asserted water requirements for dry scrubbing are much higher than other similar dry scrubbing installations, and the basis for the disparity is unsupported,” said EPA. “As confirmed by our communications with the High Plains Water District and Xcel, we also conclude that Xcel has multiple lines of access to adequate supplies of water sufficient to supply the proposed dry scrubbers (SDA) without the need to buy additional water rights.”
Xcel also alleged that EPA’s cost analysis failed to consider that the proposed dry scrubbers would: end Tolk’s sales of its fly ash or require the installation of additional baghouse capacity; and require additional landfill capacity. Xcel also alleged that EPA did not adequately consider dry sorbent injection (DSI) and non-air environmental impacts, and that the assumption of a 30-year operating life is wrong. “Our cost analysis did include an additional baghouse that could be installed upstream of the dry scrubber which can preserve Tolk’s existing fly ash sales,” said the agency. “Also, our cost analysis included landfill costs, which based on Xcel’s own information, are adequate to cover the additional disposal costs. We also believe our DSI cost methodology, in which we bounded the range of expected DSI performance, was adequate and demonstrated that DSI was not cost-effective when compared to the dry scrubber we costed for Tolk.”
Tolk is a two-unit plant with 1,067 MW of net dependable summer capacity.