SWEPCO Asked to Take a Second Look at Flint Creek Options

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Southwestern Electric Power Company (SWEPCO) (Shreveport, Louisiana), a subsidiary of American Electric Power Company (NYSE:AEP) (Columbus, Ohio) wants to spend about $408 million to install pollution-control equipment at its Flint Creek Power Plant, a 528-megawatt (MW) coal-fired generator in Gentry, Arkansas. Three groups, including the staff of the Arkansas Public Service Commission (APSC) (Little Rock, Arkansas), want SWEPCO to take a second look at the costs and benefits of retrofitting the 34-year-old plant versus other options, including demolishing Flint Creek and building a new natural gas generator in its place.

"The four options presented by SWEPCO are all pretty close in terms of cost," John Bethel, executive director of the APSC told Industrial Info in an interview. "The parties that have intervened in this case (the APSC staff, the Arkansas Attorney General's office, and the Sierra Club) agree that additional analysis is needed, and they've asked SWEPCO to run the numbers again."

SWEPCO's options include installing pollution control equipment on Flint Creek or prematurely closing the facility. If it closed Flint Creek, the utility could either:

• repower the plant with natural gas
• demolish the plant and replace it with a new, gas-fired, combined-cycle generator built on the same site, or
• replace Flint Creek's output with a gas-fired power plant located within the Southwest Power Pool (SPP)

SWEPCO and the Arkansas Electric Cooperative Corporation (AECC) (Little Rock) each own 50% of Flint Creek, and would each be responsible for 50% of the costs. SWEPCO is the plant's operator.

In testimony filed earlier this summer, SWEPCO said installing environmental controls on Flint Creek made the most economic and operational sense.

"We recognize that today's historically low natural gas prices may lead to the perception that a natural gas option has to be more economic," VenitaMcCellon-Allen, SWEPCO president and chief operating officer, said in a statement when the utility filed its rate case testimony at the end of June. "Our extensive analysis shows that retrofitting the coal-fired Flint Creek plant is the most economical and reliable choice compared to new natural gas combined-cycle units or converting the existing Flint Creek unit to natural gas."

"We carefully evaluated those options," she continued. "But over the long term, even with the potential cost impacts of additional future regulations factored in, the coal retrofit option was still the economic choice. The utility's obligation under Arkansas law is to provide reliable service at the lowest reasonable cost to our customers. Flint Creek anchors the Northwest Arkansas grid with a reliable supply of power 24 hours a day, and it has done so for more than 30 years." SWEPCO and ICF International Incorporated (NASDAQ:ICFI) (Fairfax, Virginia) evaluated the coal plant retrofit and natural gas alternatives using a range of coal and natural gas prices, emissions allowances and the potential impact of carbon dioxide regulation, the utility said. The analyses included compliance with immediate and longer term environmental regulations.

To comply with multiple environmental regulations, including the federal Cross-State Air Pollution Rule (CAPR), the Mercury and Air Toxics Standard (MATS) and the Regional Haze Rule, SWEPCO wants to install:

• a dry flue gas desulfurization system (DFGD) to reduce emissions of sulfur dioxide (SO2),
• low NOx burners (LNB) and overfire air (OFA) equipment to reduce emissions of oxides of nitrogen (NOx),
• activated carbon injection (ACI) system to reduce mercury emissions, and
• a fabric filter, also known as a baghouse, to capture particulate emissions

Peter Main, SWEPCO spokesman, told Industrial that installing the emissions control equipment will take 30 months. If the APSC renders its decision by year-end 2012, the retrofitted plant can be operating in compliance with environmental regulations by mid-2016.

SWEPCO has not yet selected an engineering, procurement & construction (EPC) firm, and Main said the utility may not go the EPC route in favor of contracting with various firms for various parts of the project. But SWEPCO believes it would be most cost-effective to install a proprietary modular DFGD system called NID™ developed by Alstom S.A. (Levallois-Perret, France).

Christian Beam, a managing director in AEP's Generation Engineering, Projects and Field Services organization, told the APSC that several factors make the NID™ technology the superior FGD retrofit option for Flint Creek. These factors include:

• Lowest total cost over the 30-year life of the project,
• Lowest water consumption of all FGD systems,
• Lowest reagent usage of all FGD systems, and
• Smallest equipment footprint

In addition, Alstom's NID™ dry scrubber technology best supports mercury removal, best supports sulfur trioxide (SO3) removal and best supports future National Pollutant Discharge Elimination System (NPDES) permit compliance, Beam told the ASPC.

Although SWEPCO said it was not legally required to obtain APSC support before proceeding on construction, McCellon-Allen said the future of Flint Creek involves such a significant investment that the utility wants the APSC to review the plan and determine that it is in the public interest.

McCellon-Allen said, "The filing at the APSC is not required for this type of project, but SWEPCO believes it is important for the Commission to see a full analysis, and have the opportunity to reach its own conclusion as to whether it is in the public interest for SWEPCO to proceed with the retrofit." Rebuttal testimony is due July 30, and then two subsequent rounds of testimony will be allowed.

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