Orlando eyes Indian River as site for new power generation

The Orlando Utilities Commission has recently acquired three old steam units at the Indian River power plant, and is eyeing them as a site for new generation, said the municipal utility in a Ten Year Site Plan filed April 1 at the Florida Public Service Commission. 

The Indian River plant is located four miles south of Titusville, Florida. The 160-acre site contains three steam electric generating units (No. 1, 2, and 3) and four combustion turbine units (A, B, C, and D). The three steam turbine units were sold to Reliant Energy in 1999, with OUC recently repurchasing the units.

Said the site plan: “Given their current condition, the Indian River steam units do not provide generating capacity for OUC, but do provide OUC with future options for new generating capacity. The combustion turbine units are primarily fueled by natural gas, with No. 2 fuel oil as an alternative. OUC has a partial ownership share of 48.8 percent (approximately 31 MW summer and 36 MW winter) in Indian River Units A and B as well as a partial ownership share of 79 percent (approximately 166 MW summer and 177 MW winter) in Indian River Units C and D.”

As a strategic consideration, OUC has been working on repositioning its assets. One major consideration was the sale of its Indian River steam units to Reliant Energy in 1996. The sale of those units allowed OUC to take positions in the newer Stanton A and B units and to update and diversify its generation portfolio. The sale offered OUC the ability to replace the less competitive oil and gas steam units with more competitive combined cycle generation. As part of the agreement associated with the termination of the gasification portion of Stanton B, OUC acquired a 165-acre tract of land in its service territory situated near its highest growth areas. The land is in an industrial area and is ideal for a new power generation site, having access to important infrastructure including a rail spur, natural gas lines, and OUC-owned and operated transmission lines.

The re-purchase of the steam units at Indian River provides OUC with full control over the Indian River site and additional alternatives for future generation, including possible repowering. OUC’s existing Stanton Energy Center and Indian River sites may accommodate future generating unit additions, the utility noted.

In regards to its newest capacity, in December 2015, OUC began receiving up to 9 MW from the John Drury Landfill, located in Holopaw in Osceola County, with an option to expand up to 25 MW of landfill gas energy. For the John Drury project, OUC built a new 25-kV distribution line that is composed of 15.5 miles of overhead and nearly five miles of underground line. The new feeder line will send clean, renewable energy from the landfill to an OUC electric substation in St. Cloud and is the longest distribution feeder on the grid. This feeder will play a large role in OUC’s clean energy strategy

OUC said it has not scheduled any unit retirements over the planning horizon, but will continue to evaluate options on an ongoing basis. One factor affecting potential unit modifications and/or retirements is the impact of pending future environmental regulations.

312-MW gas project a possibility for a 2019 construction start

OUC is projected to have adequate generating capacity to maintain its 15% reserve margin requirements until the summer of 2021. The potential expiration of a power purchase agreement with Southern Co.-Florida LLC (SCF) as of September 2023 is projected to further increase OUC’s need for additional capacity to maintain reserve margin requirements. Given the magnitude and timing of OUC’s projected need for capacity, it has been assumed for purposes of this Ten-Year Site Plan that OUC will add 312 MW (net winter) of combined cycle capacity as of a June 2021 commercial operation start to meet the projected capacity requirements. No specific site for this new capacity, which would go into construction in June 2019, is given.

OUC said it has not made any commitments to extend or terminate the PPA with SCF at this time. That decision would obviously affect the need and timing of new capacity.

Power for OUC is supplied by units owned entirely by OUC, as well as units in which OUC maintains joint ownership and power purchases. OUC’s available capacity as of Jan. 1, 2016, including capacity from units owned by OUC, the city of St. Cloud’s entitlement to Stanton Energy Center Unit 2, and OUC’s current power purchases, provides total net summer capacity of approximately 1,841 MW and total net winter capacity of about 1,897 MW.

SCF deal could be extended for 10 years beyond 2023

OUC has a purchase power agreement (PPA) with SCF for 80% of SCF’s ownership share of Stanton A. Under the original Stanton A PPA, OUC, the Kissimmee Utility Authority (KUA) and the Florida Municipal Power Agency (FMPA) agreed to purchase all of SCF’s 65% capacity share of Stanton A for 10 years, although the utilities retained the right to reduce the capacity purchased from SCF by 50 MW each year, beginning in the sixth year of the PPA, as long as the total reduction in capacity purchased did not exceed 200 MW. The utilities originally had options to extend the PPA beyond its initial term. OUC, KUA, and FMPA have unilateral options to purchase all of Stanton A’s capacity for the estimated 30-year useful life of the unit.

Subsequent amendments to the original PPA continue OUC’s capacity purchase through the 20th year of the PPA. Beginning with the 16th contract year and ending with the 20th contract year, OUC will maintain the irrevocable right to reduce the amount of capacity purchased by either 20 MW or 40 MW per year, as long as the total reduction in purchased capacity does not exceed 160 MW (this Ten-Year Site Plan reflects a 40 MW reduction to the Stanton A PPA beginning Oct. 1, 2018). Additionally, OUC has the option of terminating the PPA after the 20th contract year, which ends Sept. 30, 2023.

Rather than terminating the PPA, OUC noted that it may elect to continue the PPA for an additional five years under the Extended Term option beginning Oct. 1, 2023, and ending Sept. 30, 2028. OUC may subsequently continue the PPA for an additional five years under the Further Extension option beginning Oct. 1, 2028, and ending Sept. 30, 2033. Discussion of OUC’s projected capacity requirements throughout this Ten-Year Site Plan reflects expiration of the SCF PPA after Sept. 30, 2023.

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.