Although there are no new generation units planned to be constructed at this time, Kentucky Utilities is investing capital into existing generating plant to ensure that generation units perform reliably and will last long into the future.
On Nov. 23, this PPL Corp. (NYSE: PPL) subsidiary applied with the Kentucky Public Service Commission for a rate hike. Paul W. Thompson, the Chief Operating Officer of both Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), outlined some of the generation unit projects the companies have in the works. The application was filed by KU, but LG&E is intertwined into the application through its co-ownership of many of the KU generating plants.
For the period from July 1, 2016, through the end of the forecast test period, June 30, 2018, the company will invest roughly $131 million in outage-related maintenance of generation assets, Thompson reported. This figure includes $19 million in combustion inspections for the Brown plant combustion turbines (CTs), $9.7 million for a planned combustion inspection of new Cane Run 7 combined-cycle plant, $6.5 million for a planned rebuilding of the cooling tower at Mill Creek Unit 2, and roughly $4.2 million each on a rebuild of the cooling tower for Brown Unit 2 and boiler replacement on Trimble County Unit 2.
The company is also investing approximately $12 million through the end of the forecast test period to convert the boilers on the coal-fired Trimble County Units 1 and 2 to start up using natural gas in addition to fuel oil.
KU will also spend $17 million through the forecast test year period on rehabilitation of the Ohio Falls generating station. Ohio Falls is a run-of-the-river hydroelectric station located at the McAlpine dam on the Ohio River. The eighth and final hydroelectric generating unit at Ohio Falls is scheduled for completion in 2017, which will increase the generator nameplate rating of the Ohio Falls station to 101 MW. The work being performed at Ohio Falls includes the installation of new runners, new discharge rings, rehabilitation of wicket gates and new stator windings.
By the end of 2016, KU will complete a project to extend a gas pipeline from the Cane Run plant to the Paddy’s Run plant at a cost of approximately $14 million. Completion of this project will provide interstate gas pipeline service to Paddy’s Run and will allow this generation facility to reliably operate in the winter without impacting LG&E’s gas distribution system operation.
The company is also planning to invest $9 million in a blackstart modernization project at Cane Run, and an additional $6 million for a similar project at Trimble County. The blackstart projects will enhance the current capability for the CTs to be started without support from the electric grid, and to support the start-up of other units for the purpose of restoring power to the electric grid in the event of a wide-spread blackout.
Work continues on coal-waste upgrades
Thompson reported that the companies continue to seek out opportunities to control future costs associated with expanding and operating dry coal combustion residuals (CCRs) special waste landfills at all stations. LG&E has recently focused its efforts on the beneficial use of CCRs at the Mill Creek station to reduce landfill consumption. Currently, much of the synthetic gypsum CCR processed at the existing facilities at Mill Creek cannot be recycled into commercial applications (such as wallboard-grade gypsum) because the resulting chloride and moisture levels are too high. CCRs that cannot be beneficially used for other applications must be landfilled. LG&E is replacing and upgrading its existing gypsum dewatering system at Mill Creek to enable more CCRs to meet desired quality specifications for use in commercial applications like wallboard manufacturing. The replacement facility will be operational by 2018.
In the meantime, LG&E will operate portable gypsum dewatering facilities at Mill Creek to meet recent specific commercial beneficial use opportunities. The Mill Creek gypsum dewatering systems will increase future opportunities to meet the required specification for beneficial use in other potential applications and thereby reduce the amount of CCRs that must be landfilled on-site. LG&E currently has two opportunities for beneficial use of Mill Creek CCRs that will avoid landfilling a total of 2.65 million tons of gypsum over a seven-year period starting in late 2016. These opportunities are available because of the processing capabilities of the portable dewatering systems that will ultimately be replaced by the upgraded facility. Thus, the beneficial use program at Mill Creek will, in addition to lessening LG&E’s overall environmental impact, greatly reduce landfilling of CCRs, extend the usable life of the current landfill, and save approximately $13 million over a seven-year period compared to offsite landfilling.
Demolition of coal-fired units at Paddy’s Run is currently in progress. The total cost of that demolition project will be $24 million. The last of the coal-fired units at Paddy’s Run was retired in 1984. The level of degradation was such that safety and security issues required the demolition work to proceed.
The companies are also demolishing retired coal-fired generation plant at the Cane Run and Green River stations, at a total cost for both facilities of $55.7 million, $31 million of which will be incurred from the end of the last base rate test period through the forecast test period (July 1, 2016, to June 30, 2018). Demolition allows the space occupied by old generation plant to be potentially available for other uses and gives the companies flexibility in planning for such future use.