Coal Plants Too Expensive in WI and NV: Platts Electric Utility Week

Posted on August 22, 2008. Filed under: Coal, Generation Plants |

Two articles by Ethan Howland from Platts Electric Utility Week:

Wisconsin PSC staff urge rejection of 300-MW WP&L coal-fired plant

Wisconsin Power & Light, an Alliant Energy utility, should drop its proposed 300-MW power plant in Cassville, Wisconsin, because of soaring costs for materials and labor and climate issues, according to Wisconsin Public Service Commission staff.

WP&L’s proposed $1.1 billion Nelson Dewey Unit 3 would be the most expensive conventional coal-fired plant in the US, Kenneth Detmer, a PSC staffer, told the commission last week. The plant would cost $3,611/kW. In comparison, the just-finished 500-MW Weston 4 plant, built by Wisconsin Public Service near Wausau, Wisconsin, cost about $1,400/kW, and We Energies’ 1,250-MW Elm Road project, under construction near Milwaukee, cost about $1,800/kW, staff said.

Also, PSC staff believe the cost estimates for the project are unreliable. “The large uncertainty in the [cost] estimates suggests an evaluation of all options needs to occur again before WP&L’s cost estimates can be viewed as reliable,” Detmer said. Staff noted that WP&L’s latest cost estimate, up 20% from a September 2007, forecast, will likely be revised upwards.

Further, PSC staff argue that a plan by WP&L to burn up to 20% biomass at the plant, add 300 MW of wind and retire a 76-MW coal-fired unit early would increase greenhouse gas emissions compared with 300 MW from a super critical coal-fired plant (EUW, 16 June, 24). WP&L, based in Madison, Wisconsin, is proposing to use circulating fluidized bed technology, which is less efficient than other coal-fired technologies.

According to staff, a power purchase agreement or a natural gas-fired plant may be a better option. “I believe that a new coal-fired generation unit, given today’s construction costs and current and likely fuel costs, is not an optimal choice,” said Denis Keptke, PSC senior economist. “I believe the lower risk option for both ratepayers and shareholders is to build a combined-cycle natural gas unit first.”

WP&L is buying the 300-MW Neenah simple-cycle plant in Neenah, Wisconsin, which was designed to be converted to a combined-cycle plant (EUW, 21 April, 5). Converting the plant is an option for meeting supply needs, according to Keptke.

PSC staff also contend that WP&L’s annual load growth estimates, at 2.37% a year, are too high. Staff assumed a 1.65% annual growth rate in its modeling.

The PSC will hold hearings on WP&L’s Nelson Dewey proposal in mid-September. A final decision is expected in December.

Nevada PUC staff urges utilities to pursue smaller coal-fired option

Fearing additional cost increases and delays to a 1,500-MW coal-fired plant proposed by Sierra Pacific Resources’ two utilities, Nevada regulatory staff last week said they want the company to pursue a smaller coal-fired plant at a different site.

Nevada Power and Sierra Pacific Power, SPR subsidiaries, should begin developing a 500-MW coal-fired plant as an alternative to the Ely Energy Center, according to Nevada Public Utilities Commission staff in filings last week with the commission.

In 2006, the utilities pegged the cost for the plant and a related 500-kV transmission project at $3.8 billion. The utilities now think the project will cost about $5 billion. “Staff has concerns about the economic viability of the EEC if construction costs continue to increase at accelerated rates,” Jon Davis, a PUC staff member, told the commission.

The in-service date for the project has been pushed back from 2011 to 2015 for the plant’s first 750-MW unit, with a second unit following a year later (EUW, 7 April, 13). PUC staff believe further delays are possible, which could add to the plant’s cost.

Staff wants the PUC to direct the utilities to explore building a 500- to 700-MW plant next to the existing 522-MW, coal-fired Valmy station. The project would cost less than the Ely project on a per kilowatt basis because it would share facilities with the existing plant, Davis said. PUC staff recommends that the PUC allow Nevada Power to spend $13 million on permitting a new Valmy unit.

Staff said a smaller plant would allow for more geothermal energy to be developed in northern Nevada. The Ely project would allow for about 400 MW of geothermal capacity to be added in northern Nevada while a smaller Valmy unit would allow for 1,100 MW of geothermal capacity to come online by 2020, Davis said.

Staff also questioned Nevada Power’s load forecast used to justify the larger Ely Energy Center. The economy in southern Nevada has slowed significantly and Nevada Power may not need the output from the larger plant, Davis said.

PUC staff and the Bureau of Consumer Protection, which represents ratepayers, recommended that the PUC allow Nevada Power to buy Reliant Energy’s 562-MW Bighorn plant near Primm, Nevada, for $510 million. They also supported allowing Nevada Power build 500-MW of natural gas-fired generation for $682 million at the existing Harry Allen plant.

The PUC staff and BCP recommendations were made in response to a request by Nevada Power to amend its long-range resource plan. The PUC will hold hearings on the request in early September. Adam Grant, a Nevada Power spokesman, declined to comment on the recommendations.


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