The combined-cycle conversion of the simple-cycle units (Units 2-5) at the Polk power plant will be completed in January 2017, said Tampa Electric officials in Sept. 1 fuel testimony filed at the Florida Public Service Commission.
Penelope A. Rusk, the utility’s Manager, Rates in the Regulatory Affairs Department, when asked if there are any significant events reflected in the calculation of the 2017 fuel and purchased power and capacity cost recovery projections, replied: “Yes, the company’s highly efficient Polk combined cycle (‘CC’) unit is anticipated to begin commercial service in January 2017. The unit will provide reliable and efficient natural gas-fired generation for customers. As stated in the testimony of Tampa Electric witness J. Brent Caldwell, the company did not require new natural gas supply or transportation agreements to serve this unit, due to the flexibility of the company’s existing natural gas supply portfolio.”
Benjamin F. Smith II, employed by Tampa Electric in the Wholesale Marketing group within the Fuels Management Department, noted that the Polk CC construction timeline often requires at least two of the existing 150-MW Polk combustion turbine (CT) units to be unavailable from May through November of this year for combined cycle tie-in and testing. This created a projected need for capacity and energy to meet system reserve margin requirements and ensure operational flexibility, with that need being filled by off-system purchases.
Caldwell, the utility’s Director, Fuel Planning and Services, reported that Tampa Electric’s fuel mix includes coal, natural gas and oil. Coal is the primary fuel for Big Bend Station, and natural gas is a secondary fuel. The Polk Unit 1 integrated gasification combined-cycle unit utilizes coal as the primary fuel and natural gas as a secondary fuel. Bayside Station combined-cycle units and the company’s collection of peakers (i.e., simple cycle and aero-derivative combustion turbines) utilize natural gas. Some of Tampa Electric’s peakers utilize oil as a secondary fuel, but oil consumption as a percentage of system generation is minute (less than 1%).
Coal burn forecast is up for 2017
Coal is projected to stage something of a rebound in 2017. The actual and projected gas to coal generation ratios for the Tampa Electric system were or are:
- 2014 – 38% was gas-fired generation, and 62% was coal;
- 2015 – 52% was gas, and 48% was coal;
- 2016 – 58% is projected to be gas, and 42% coal; and
- 2017 – 53% is projected to be gas, and 47% coal.
Tampa’s coal burn in 2014 was 5 million tons, falling sharply to 4 million tons in 2015, then to 3.25 million tons projected in 2016, with a rebound to 4 million tons in 2017.
Tampa Electric uses solid fuel for the four pulverized-coal steam turbine units at Big Bend Station and as the primary fuel for the IGCC Polk Unit 1. The coal-fired units at Big Bend Station are fully scrubbed for sulfur dioxide and nitrogen oxides and are designed to burn high-sulfur Illinois Basin coal. Polk Unit 1 currently burns a mix of petroleum coke and low-sulfur coal.
Tampa Electric supplies Big Bend Station’s coal needs through a combination of three coal supply agreements that continue through 2017 and a collection of shorter term contracts and spot purchases. Tampa Electric has contracted for and has available from inventory over 75% of its 2017 expected coal needs through agreements with coal suppliers to mitigate price volatility and ensure the reliability of supply. Tampa Electric anticipates the remaining solid fuel consumption for Big Bend Station and Polk Unit 1 will be procured through spot market purchases or consumed from inventory during 2016 and 2017.
Tampa Electric can receive coal at its Big Bend Station via waterborne or rail delivery. Once delivered to Big Bend Station, Polk Unit 1 solid fuel is trucked to the Polk Station.
The waterborne deliveries come via the Mississippi River system through United Bulk Terminal or from foreign sources. One of two river barge transportation agreements expire at the end of 2016. Tampa Electric is currently assessing the most economic replacement option for this agreement. Due to the flexibility in the company’s delivery and supply portfolio, Tampa Electric can meet its 2017 solid fuel delivery needs without replacing this agreement. Tampa Electric has taken advantage of a number of spot market transportation opportunities. Tampa Electric has used a different river transportation provider and three new terminals during 2016 to manage its portfolio during changing coal consumption levels.
On Aug. 1, 2016, United Ocean Services (UOS), Tampa Electric’s gulf transportation provider, filed for protection under Chapter 11 bankruptcy law. While this has not become a performance issue yet and Tampa Electric believes UOS fully intends to emerge from the filing as an operationally sufficient and financially stronger transportation service provider, the company must consider the uncertainty of UOS’s future, Caldwell noted. Tampa Electric is developing contingency plans to ensure reliable and cost-effective solid fuel supply to its power plants. It is likely that at least several months will pass before more definitive information about the UOS bankruptcy outcome is available.
Tampa Electric receives natural gas via the Florida Gas Transmission (FGT) and Gulfstream Natural Gas System LLC pipelines. The ability to deliver natural gas directly from two pipelines increases the fuel delivery reliability for Bayside Power Station, which is composed of two large natural gas combined-cycle units and four aero-derivative combustion turbines. Natural gas can also be delivered to Big Bend Station directly from Gulfstream to support the aero-derivative combustion turbine and natural gas co-firing in the coal units. Polk Station receives natural gas from FGT to support the four existing natural gas combustion turbines that are being converted to Polk Unit 2 CC, and the Polk Unit 1 IGCC as an alternate fuel.
The commodity price for natural gas during 2017 is projected to be slightly higher than the prices projected for 2016. Reductions to natural gas production combined with increased gas-fired generation demand have put upward pressure on natural gas prices.
The 2017 coal commodity price projection is about the same as the price projected for 2016. Lower national coal demand resulting from coal-fired unit closures is expected to keep coal prices low despite consolidation and production cuts in domestic coal supply, Caldwell reported. However, in the long term these production cuts are expected to put upward pressure on coal prices.