Reports related to this article:
Project(s): View 4 related projects in PECWeb
Plant(s): View 1 related plant in PECWeb
Released January 20, 2014 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Asset shuffling in the Southwest U.S. Power market continued last month, as Arizona Public Service Company (APS) (Phoenix, Arizona), the principal subsidiary of Pinnacle West Capital Corporation (NYSE:PNW) (Phoenix, Arizona), acquired additional ownership in the Four Corners Power Plant and decided to shut three of the plant's older and less-efficient units. After APS acquired the 48% stake in Four Corners units 4 and 5 from Southern California Edison (SCE) (Rosemead, California), a subsidiary of Edison International (NYSE:EIX) (Rosemead, California), APS then closed units 1, 2 and 3, which came online in the early 1960s. The Four Corners plant is near Farmington, New Mexico.
The APS-SCE asset transfer continued a trend in the Southwest, in which utilities headquartered in California and Nevada are exiting coal-fired power as a result of regulatory or legislative measures enacted in their home states. Plant owners have closed, or have committed to close, more than 3,500 megawatts (MW) of coal-fired capacity in the region by 2020.
Aside from the APS-SCE transaction, which was announced December 31, operators of the Navajo, San Juan and Reid Gardner stations have announced their commitment to close more than 1,900 MW of capacity at those coal-fired plants over the 2013-20 timeframe. Another large, coal-fired generator, the 1,580-MW Mohave Generating Station in Laughlin, Nevada, was closed several years ago. Beyond 2020, additional coal-fired unit closures in the region are possible as environmental regulations tighten. For more on this issue, see October 13, 2013, article - Navajo Generating Station Looks for Favorable EPA Rule on Emissions Reductions, and June 10, 2013, article - NV Energy Begins Process to Exit Coal-Fired Electricity Business.
APS will pay SCE about $1 million per megawatt of capacity for its 180-MW stake in Four Corners units 4 and 5. At the same time, in an effort to end environmental litigation over the huge, coal-fired power plant, APS permanently closed units 1, 2 and 3 at Four Corners--about 560 MW of capacity--and pledged to install selective catalytic reduction (SCR) equipment on units 4 and 5. That environmental upgrade, which will cost about $500 million, is about half the cost of keeping all five units open at Four Corners, and installing pollution-control equipment on all of the units.
"As it has in other parts of the country, tougher environmental laws and regulations in the West and Southwest are forcing asset owners to reassess their entire generation portfolio," said Brock Ramey, Industrial Info's manager of North American Power Research. "By itself, closing three small units at Four Corners will not have a large impact on regional power prices. But a lot of coal-fired generation is being taken off the table in the West and Southwest, which will affect regional electric prices and, potentially, electric reliability."
Industrial Info's experts will be on hand to discuss strategic trends and project spending in the North American Electric Power industry at the upcoming 2014 Industrial Market Outlook executive briefing in Houston on January 29. Registration is complimentary but a RSVP is required.
With the purchase of SCE's ownership of units 4 and 5, APS now owns 63%, or 970 MW, of the 1,540 MW that will continue to operate at Four Corners. Unit 4 came online in 1969, and Unit 5 came online in 1970.
Other utilities with an ownership stake in Four Corners units 4 and 5 are:
But Brandt said the decision to close units 1 to 3 was "bittersweet because generations of Four Corners employees have dedicated their careers to running those three units to keep the lights on for our customers."
Closing units 1 to 3 and installing SCR equipment at units 4 and 5 will meet the Best Available Retrofit Technology (BART) requirements for the plant, which were issued August 2012 by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). The SCR systems will be operating by July 31, 2018. APS said the changes will cut Four Corners' emissions of particulates by 43%, nitrogen oxides (NOx) by 36%, carbon dioxide (CO2) by 30%, mercury by 61% and sulfur dioxide (SO2) by 24%.
"Our plan for the plant moving forward saves APS customers nearly a half-billion dollars over other energy sources and maintains a highly reliable, cost-effective source of electricity generation for APS and other users in the Southwest," said Mark Schiavoni, APS executive vice president, operations, in a December 31 statement. "Along with natural gas, nuclear, renewables and energy efficiency, coal has an important place in our company's balanced energy portfolio."
Decommissioning of units 1 to 3, including complete dismantling and removal of the older units and any associated structures, will begin immediately and is expected to last about three years. Employees who operated and maintained units 1, 2 and 3 now will focus on decommissioning activities.
Schiavoni reiterated that no layoffs are planned at Four Corners, where an estimated 82% of workers are Native American. Any future reduction in workforce will come through normal attrition. APS said the Four Corners power plant and nearby coal-mining operations create an estimated $225 million annual economic impact on the New Mexico and Navajo Nation economies. Unemployment in the Navajo reservation is extremely high, about 50%, so preserving local jobs at the power plant and a nearby coal mine were important considerations in APS' decision.
APS has not selected an engineering, procurement and construction (EPC) firm for the Four Corners SCR projects, nor has it selected a specific SCR technology. But URS Corporation (NYSE:URS) (San Francisco, California) will provide engineering services for the pollution-control projects, which is scheduled to begin turning dirt in April 2016. In addition to those projects, and the demolition of units 1 to 3, Industrial Info is tracking two active refurbishment projects for Unit 5, totaling about $33 million. Both of refurbishment projects are scheduled to kick off in early 2015.
View Plant Profile - 1523368
View Project Report - 42000423 42000424300113223 300113227
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The APS-SCE asset transfer continued a trend in the Southwest, in which utilities headquartered in California and Nevada are exiting coal-fired power as a result of regulatory or legislative measures enacted in their home states. Plant owners have closed, or have committed to close, more than 3,500 megawatts (MW) of coal-fired capacity in the region by 2020.
Aside from the APS-SCE transaction, which was announced December 31, operators of the Navajo, San Juan and Reid Gardner stations have announced their commitment to close more than 1,900 MW of capacity at those coal-fired plants over the 2013-20 timeframe. Another large, coal-fired generator, the 1,580-MW Mohave Generating Station in Laughlin, Nevada, was closed several years ago. Beyond 2020, additional coal-fired unit closures in the region are possible as environmental regulations tighten. For more on this issue, see October 13, 2013, article - Navajo Generating Station Looks for Favorable EPA Rule on Emissions Reductions, and June 10, 2013, article - NV Energy Begins Process to Exit Coal-Fired Electricity Business.
APS will pay SCE about $1 million per megawatt of capacity for its 180-MW stake in Four Corners units 4 and 5. At the same time, in an effort to end environmental litigation over the huge, coal-fired power plant, APS permanently closed units 1, 2 and 3 at Four Corners--about 560 MW of capacity--and pledged to install selective catalytic reduction (SCR) equipment on units 4 and 5. That environmental upgrade, which will cost about $500 million, is about half the cost of keeping all five units open at Four Corners, and installing pollution-control equipment on all of the units.
"As it has in other parts of the country, tougher environmental laws and regulations in the West and Southwest are forcing asset owners to reassess their entire generation portfolio," said Brock Ramey, Industrial Info's manager of North American Power Research. "By itself, closing three small units at Four Corners will not have a large impact on regional power prices. But a lot of coal-fired generation is being taken off the table in the West and Southwest, which will affect regional electric prices and, potentially, electric reliability."
Industrial Info's experts will be on hand to discuss strategic trends and project spending in the North American Electric Power industry at the upcoming 2014 Industrial Market Outlook executive briefing in Houston on January 29. Registration is complimentary but a RSVP is required.
With the purchase of SCE's ownership of units 4 and 5, APS now owns 63%, or 970 MW, of the 1,540 MW that will continue to operate at Four Corners. Unit 4 came online in 1969, and Unit 5 came online in 1970.
Other utilities with an ownership stake in Four Corners units 4 and 5 are:
- Public Service Company of New Mexico (Albuquerque, New Mexico), a unit of PNM Resources Incorporated (NYSE:PNM) (Albuquerque, New Mexico), 13%
- Salt River Project (Phoenix, Arizona), 10%
- El Paso Electric Company (NYSE:EE) (El Paso, Texas), 7%
- Tucson Electric Power (Tucson, Arizona), a unit of UNS Energy Corporation (NYSE:UNS) (Tucson, Arizona), 7%
But Brandt said the decision to close units 1 to 3 was "bittersweet because generations of Four Corners employees have dedicated their careers to running those three units to keep the lights on for our customers."
Closing units 1 to 3 and installing SCR equipment at units 4 and 5 will meet the Best Available Retrofit Technology (BART) requirements for the plant, which were issued August 2012 by the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). The SCR systems will be operating by July 31, 2018. APS said the changes will cut Four Corners' emissions of particulates by 43%, nitrogen oxides (NOx) by 36%, carbon dioxide (CO2) by 30%, mercury by 61% and sulfur dioxide (SO2) by 24%.
"Our plan for the plant moving forward saves APS customers nearly a half-billion dollars over other energy sources and maintains a highly reliable, cost-effective source of electricity generation for APS and other users in the Southwest," said Mark Schiavoni, APS executive vice president, operations, in a December 31 statement. "Along with natural gas, nuclear, renewables and energy efficiency, coal has an important place in our company's balanced energy portfolio."
Decommissioning of units 1 to 3, including complete dismantling and removal of the older units and any associated structures, will begin immediately and is expected to last about three years. Employees who operated and maintained units 1, 2 and 3 now will focus on decommissioning activities.
Schiavoni reiterated that no layoffs are planned at Four Corners, where an estimated 82% of workers are Native American. Any future reduction in workforce will come through normal attrition. APS said the Four Corners power plant and nearby coal-mining operations create an estimated $225 million annual economic impact on the New Mexico and Navajo Nation economies. Unemployment in the Navajo reservation is extremely high, about 50%, so preserving local jobs at the power plant and a nearby coal mine were important considerations in APS' decision.
APS has not selected an engineering, procurement and construction (EPC) firm for the Four Corners SCR projects, nor has it selected a specific SCR technology. But URS Corporation (NYSE:URS) (San Francisco, California) will provide engineering services for the pollution-control projects, which is scheduled to begin turning dirt in April 2016. In addition to those projects, and the demolition of units 1 to 3, Industrial Info is tracking two active refurbishment projects for Unit 5, totaling about $33 million. Both of refurbishment projects are scheduled to kick off in early 2015.
View Plant Profile - 1523368
View Project Report - 42000423 42000424300113223 300113227
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
