Gainesville plant ‘not technically needed’

Weekly Update courtesy of Utility Regulatory News #3980: Because a municipally planned biomass-fired power plant project would provide the city with additional fuel diversity as well as various environmental benefits, the Florida Public Service Commission (PSC) has issued the project a determination of need, even though the city was found to have sufficient generating capacity through at least 2023.

In Florida, no entity may proceed with construction of a generating facility rated at more than 75 megawatts (MW) unless it first receives a determination of need from the commission. Although other state and local consents also are required, those authorizations may not be pursued until the requisite determination of need has been obtained from the PSC. In the instant case, the City of Gainesville, through its municipal electric service provider, Gainesville Regional Utilities (GRU), had sought a determination of need from the PSC for a proposed 100-MW biomass-fired station, which it said should be ready for service by the end of 2013.

As support for its proposal, the city noted that a primary power purchase agreement is set to expire in 2013 and that a large coal-fired plant is expected to be taken out of service for scheduled maintenance in the same time frame. According to GRU, the two events taken together would leave the city in a capacity-deficient situation, at least temporarily, although it acknowledged that because of a 15% capacity reserve policy and various other power purchase arrangements, it is unlikely that it will experience any true shortage of capacity before 2023 at the earliest.

The commission agreed that the biomass project was not “technically needed” in order for GRU to maintain reliable service in the short term. However, the commission said that the concept of “need” can be viewed in different ways. From the PSC’s perspective, the biomass unit would contribute to greater fuel and supply diversity, would offer a good hedge against possible future carbon emission reduction requirements, and would provide environmental attributes not available from conventional fossil-fueled plants. Consequently, the commission held that the biomass facility’s ability to replace older, less efficient sources of power with a cleaner, more productive form of generation, while not necessary in a technical sense, nevertheless would satisfy other types of need, such that it was appropriate to issue the formal determination of need. Subscribe to URN for the full story.

Posted: August 13th, 2010 under biomass, carbon regulation, climate change, coal, energy policy, green energy, regulation, renewables.
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Business-as-Usual Will Stifle Nuclear, Coal Development

In a letter dated July 21, Duke Energy CEO James Rogers urged Senate Majority Leader Harry Reid (D-Nev.) to “include a carbon title in your base energy bill that allows this country to move forward.” Rogers argued that a business-as-usual approach to carbon regulation would stifle development of new nuclear and coal-fired power plants and make America dangerously dependent on volatile natural gas markets.

Rogers also referred Sen. Reid to a McKinsey analysis that showed U.S. GDP would grow more under a “utility first” carbon regulation scenario than it would without any carbon regulation, and that carbon allowances and efficiency improvements would actually reduce electricity bills on average by 7 percent.

Rogers’ letter arrives just as Senate Democrats were convening to debate whether to include a carbon title in an energy bill sponsored by the majority leader. The San Francisco Chronicle’s website quoted Senate sources predicting that a scaled-down bill would proceed in late July and would not include carbon regulation, but some legislators—including Sen. Joe Lieberman (I-Ct.)—are hoping to retain the carbon title in Reid’s bill.-Michael T. Burr

Posted: July 22nd, 2010 under Current News, carbon regulation, climate change, coal, efficiency, energy policy, green energy, natural gas, nuclear renaissance, renewables.
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Weekly Update Courtesy of URN #3973: The Minnesota Court of Appeals has affirmed a Minnesota Public Utilities Commission (PUC) decision in which the commission had declined to compel an electric utility, Northern States Power Co. d/b/a Xcel Energy, to enter into a power purchase agreement (PPA) with the sponsor of an integrated gasification combined cycle (IGCC) power plant.

The project developer, Excelsior Energy Inc., had touted its Mesaba Energy Project as a state-of-the-art IGCC facility that would be both environmentally friendly and economically productive. Although it had received certain preliminary permits and local approvals for the project, Excelsior was unable to reach agreement with Xcel Energy for purchasing the unit’s output. Excelsior thereupon petitioned the PUC for an order mandating that Xcel Energy sign the developer’s proffered PPA.

In considering the terms of the proposed PPA, the commission undertook a two-part analysis, the first part of which looked at whether the plant qualified as an innovative energy project (IEP) under state law. The commission said that if that first part were answered in the affirmative, then it needed to determine if the associated PPA would be in the public interest. Despite various parties’ claims to the contrary, the PUC declared that the Mesaba project did indeed fit within the definition of an IEP under state law. The commission explained that the IGCC technology was clearly innovative, would use coal as a primary fuel, and would significantly reduce four noxious emissions enumerated in the controlling statute. The commission thus concluded that the project met the basic criteria for IEP status established in the legislation. However, the commission ultimately disapproved the PPA, deeming it to involve an excessive and unrealistic cost structure that could jeopardize Xcel Energy’s financial health if it were forced to enter the agreement. Although the project developer argued that the PUC’s public interest analysis had exceeded its PPA review authority, the court held that the commission was clearly within its rights to conduct such a review, given its obligation to protect the overall public interest and the broad discretion conferred upon it to interpret those laws and regulations which it has been charged with enforcing, such as the IEP statute.

Accordingly, the court refused to substitute its judgment for that of the commission.-Subscribe to Utility Regulatory News for the full story.

Posted: June 18th, 2010 under IGCC, Uncategorized, carbon regulation, climate change, coal, green energy.
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Amid a torrent of news about clean-tech projects and developments, three coal-fired power projects in the Great Plains and Mountain West seem to be bucking the trend — in part by getting on the green bandwagon.

In the first example, Minnesota-based G&T cooperative Great River Energy announced plans to develop a $300 million cellulosic biorefinery to be built on the site of its 99-MW lignite-fired Spiritwood cogeneration project, now under construction near Jamestown, N.D. The Dakota Spirit AgEnergy biorefinery would use agricultural waste to produce three products: ethanol, lignin and molasses. The C5 ethanol would be sold in wholesale markets, while the molasses would be used as a livestock feed adjunct and the lignin would be burned in the Spiritwood boiler. Great River Energy is negotiating with Inbicon of Denmark, which developed a similar biorefinery in Denmark.

In a second example, Black Hills Power Corp. began commercial operations at its $247 million WyGen III plant in northeastern Wyoming on April 1. The 110-MW plant started up 24 months early, according to company officials. It will burn Wyoming coal to provide power to customers in western South Dakota and parts of Wyoming and Montana. Black & Veatch served as project engineer.

Black Hills Power sold a 23-percent interest in the plant to the city of Gillette in mid-March for $62 million. Last April MDU Resources acquired 25 percent of the plant. Rate cases are proceeding before regulatory commissions in all three states to finance the project’s costs.

And in the third example, on March 8 the Wyoming Supreme Court upheld an air-quality permit the state’s Department of Environmental Quality issued more than three years ago for Basin Electric Power Cooperative’s 385-MW Dry Fork Station near Gillette. Environmental groups sued to stop construction on the $1.3 billion plant, challenging the validity of the state’s air permit, and also questioning whether the G&T cooperative selected the “best-available control technology” as defined by the Clean Air Act when selecting the plant’s pulverized-coal boiler design. Sargent & Lundy served as architect-engineer.

Although the Wyoming high-court ruling is a major victory for the Dry Fork project, it still faces a federal legal challenge led by the Sierra Club in U.S. District Court in Cheyenne.

Posted: April 2nd, 2010 under Uncategorized, carbon regulation, climate change, coal.
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