Arkansas, EPA Spar Over Federal Regional Haze Plan

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A two-unit, 1,700-megawatt (MW), coal-fired power plant operated by the Arkansas affiliate of Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) is at the center of a dispute between Arkansas and the U.S. Environmental Protection Agency (EPA) (Washington, D.C.), as federal officials work to improve visibility in federal Class 1 areas in Arkansas and Missouri.

The EPA said its Federal Improvement Plan (FIP) would lower emissions of sulfur dioxide (SO2) by 68,500 tons per year. Emissions of oxides of nitrogen (NOx) would be cut by 15,100 tons annually. The agency said its plan would improve visibility at four Class 1 areas in Arkansas and Missouri, while providing health benefits to residents of those states. EPA has authority to regulate regional haze under the Clean Air Act.

Under a final FIP published September 27 in the Federal Register, the EPA set emission limits for SO2, NOx and particulate matter (PM) for nine generating units located at five power plants and one pulp and paper mill in Arkansas. The units will be required to install best-available retrofit technologies (BART) to lower emissions and improve visibility at Arkansas' two federal Class 1 areas, the Caney Creek and Upper Buffalo wilderness areas, and Missouri's two Class 1 areas, the Hercules-Glades Wilderness Area and the Mingo National Wildlife Refuge.

The EPA's FIP mandates installation of BART equipment to lower SO2, NOx and PM emissions at these plants:

• Carl E. Bailey Generating Station Unit 1, a 122-MW, gas-fired unit that began operating in 1966. The station is owned and operated by Arkansas Electric Cooperative Corporation (Little Rock, Arkansas).
• John L. McClellan Generating Station Unit 1, a 133-MW, gas-fired unit that began operating in 1972. This unit also is owned and operated by Arkansas Electric Cooperative Corporation.
• Flint Creek Power Plant Unit 1, a 510-MW, coal-fired unit owned and operated by a subsidiary of American Electric Power (AEP) (NYSE:AEP) (Columbus, Ohio) that began generating electricity in 1978.
• White Bluff Plant units 1 and 2 and an auxiliary boiler, all fired by coal, with total generating capacity exceeding 1,700 MW. A unit of Entergy Corporation owns and operates that station.
• Unit 4 of the Lake Catherine Steam Plant, a 552-MW, gas-fired plant operating since 1950. This plant also is operated by Entergy.
• Boilers 1 and 2 at the Ashdown Kraft Pulp & Paper Mill, located in Ashdown, Arkansas. The two coal-fired boilers have total generating capacity of 156 MW. The mill, which began operating in 1968, is owned by a unit of Domtar Corporation (NYSE:UFS) (Montreal, Quebec).

The EPA's FIP has an effective date of October 27, 2016.

Federal regulators will allow the Bailey and McClellan units to comply by switching to low-sulfur coal, according to EPA's FIP filing in the Federal Register. Flint Creek will have to install a dry scrubber. The White Bluffs units will have to install a dry scrubber and low-NOx burners with separate over fire air (SOFA) burners. Entergy's Catherine Lake unit will have to install burners out of service (BOOS) equipment, EPA said. The agency said Boiler 1 at the Ashdown Kraft Paper Mill did not require any new equipment, but Unit 2 would have to install a scrubber pump upgrade on its existing venturi scrubbers.

The EPA reportedly estimated the cost of equipment installations to total about $500 million, but utilities reportedly estimate the cost at more than $2 billion.

The most contentious aspect of the FIP may be its BART mandate on the White Bluff Power Station. Years ago, Entergy proposed installing pollution control equipment to lower SO2, NOx and PM emissions from that station, at a cost of about $730 million. But those plans were put on hold pending the resolution of Arkansas' fight with the EPA.

Following the release of the FIP, Entergy said in a statement, "We have not had the opportunity to thoroughly review the final FIP, but we have provided the EPA alternative strategies ... that--unlike the EPA FIP--would have achieved comparable visibility improvements without the $2 billion price tag of installing expensive scrubbers on four units in five years."

"It simply would be unreasonable to saddle the ratepayers of Entergy Arkansas and its co-owners with over $2 billion in unnecessary costs for visibility improvement, when current data demonstrates that visibility at Arkansas' protected areas exceeds EPA's goals for the state and continues to improve," the statement continued.

Several years ago, Arkansas proposed a state implementation program (SIP) to address regional haze. The EPA accepted parts of the SIP while rejecting others. For several years, EPA has been working with the Arkansas Department of Environmental Quality (Little Rock, Arkansas) to address parts of the SIP rejected by federal regulators, but a negotiated agreement was not reached. State officials have vowed to sue to block the FIP.

News reports in Arkansas said Entergy was willing to close the White Bluffs station and replace its lost generation with a new gas-fired plant and renewable generation. The state of Arkansas objected to the inclusion of the White Bluff plant in the FIP. Guy Donaldson, the regional chief of air planning for the EPA in Dallas, reportedly said the Entergy plant is a leading source of sulfur-dioxide emissions in Arkansas.

"Like many EPA regional haze plans, the one involving Arkansas was at odds with the plan developed by the state," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "The state may sue to stop implementation of the FIP, but federal courts often, though not always, uphold the EPA on regional haze lawsuits."

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