The Kentucky Public Service Commission on Aug. 8 approved three new environmental compliance projects for Louisville Gas and Electric related to coal-fired capacity.
On Jan. 29, Louisville Gas and Electric (LG&E) applied for two Certificates of Public Convenience and Necessity (CPCN) and approval of an amended environmental compliance plan. One CPCN is for Project 29, consisting of surface-impoundment-related construction and a new process-water system at the coal-fired Mill Creek Generating Station; the other is for Project 30, consisting of surface-impoundment-related construction and a new process-water system at the coal-fired Trimble County Generating Station.
The surface-impoundment-related construction, consisting of closing five surface impoundments at Mill Creek and two at Trimble County, is necessary to comply with the U.S. Environmental Protection Agency’s Disposal of Coal Combustion Residuals from Electric Utilities final rule (CCR Rule), while the new process-water systems are required to continue operating those generating stations without the surface impoundments.
LG&E’s requests for approval of its amended environmental compliance plan (“2016 Plan”) is for the purpose of recovering the costs of the surface-impoundment-related and process-water systems construction and proposed new pollution-control facilities through its Environmental Cost Recovery (ECR) Surcharge tariff.
LG&E asserts that the projects included in its application are required for compliance with the federal Clean Air Act, the CCR Rule, the Mercury and Air Toxics Standards (MATS Rule), and other environmental requirements that apply to LG&E facilities used in the production of energy from coal. On Feb. 5, LG&E’s application was rejected because it failed to comply with state law. On Feb. 9, LG&E filed revisions which cured the deficiency, and the application was accepted for filing as of that date.
Compliance with the CCR Rule will, according to LG&E, require it to close the ash ponds at Mill Creek and Trimble County as proposed in this proceeding. In addition, LG&E states that it has to construct process-water systems in order to address the handling of process water from continuing station operations and from the proposed impoundment closure activities. LG&E states that the proposed construction of new process-water systems must be completed in order to close the seven existing surface impoundments and to continue operations at the Mill Creek and Trimble County generating stations in compliance with its existing permits for discharging water.
The total capital cost of these new pollution-control projects is estimated to be approximately $315.9 million, of which LG&E seeks to recover $313.8 million through the ECR mechanism as part of its 2016 Plan.
- Project 28 involves the installation of supplemental mercury-related control technologies at Mill Creek Units 1-4 and Trimble County Unit 1, which, according to LG&E, will allow the use of the most cost-effective additive injections in order to mitigate mercury emissions under the MATS Rule. LG&E estimates it will cost $4.9 million to install these technologies. Currently, the wet flue gas desulfurization (WFGD) systems at Mill Creek and Trimble County use PAC injections in the process to capture mercury. A phenomenon called mercury re-emission can occur from the PAC injection process that could result in excessive mercury emissions. To reduce the occurrence of mercury re-emission, LG&E plans to install equipment to apply additives to the coal for Mill Creek Units 1 and 2 to improve mercury oxidation in order to increase water solubility, and thus capture mercury that otherwise could be re-emitted. Project 28 also includes equipment at all Mill Creek units and Trimble County Unit 1 for injecting an organo-sulfide chemical additive into the WFGD reaction tanks to reduce mercury re-emission. These additional controls are designed to act either in combination with or as total substitute for the PAC injection. LG&E also asserts that the addition of a mercury-control injection system would make CCR produced at the Mill Creek station and Trimble County Unit 1 more marketable as beneficial use products because it would enable LG&E to have greater control over where the mercury is captured.
- Projects 29 and 30 involve the closure of ash ponds and the construction of process-water systems at Mill Creek and Trimble County Unit 1, respectively. While LG&E has a number of options in developing the closure plans for each of these ash ponds, LG&E notes that it seeks to balance these challenging factors: compressed compliance deadlines; optimizing existing properties at each station site; timing of closures to support ongoing operations; and assessing how the closures can be conducted in the lowest-reasonable-cost manner to comply with the CCR Rule. In its economic analysis of Project 29, LG&E evaluated the proposal against retiring Mill Creek in 2019 and replacing the capacity. LG&E’s economic analysis indicated that the present value revenue requirement for Project 29, over three gas-price scenarios, was between $225 million and $450 million lower than the retirement alternative. In its economic analysis of Project 30, LG&E evaluated the following alternatives: continuing to operate Trimble County; retiring Trimble County in 2019 and replacing the capacity; and converting Trimble County to operate on natural gas. Each alternative was evaluated over three gas-price scenarios: low, mid, and high. LG&E’s economic analysis indicated that the continued operation of Trimble County with the proposed investments associated with Project 30 was the least-cost option.
LG&E, like its sister company Kentucky Utilities, is a subsidiary of PPL Corp. (NYSE: PPL).