Alliant plans coal retrofits, retirements at two utility subsidiaries

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Alliant Energy and its Wisconsin Power and Light (WPL) and Interstate Power and Light (IPL) subsidiaries are in the process of adding new emissions controls on several coal-fired power units and retiring others, Alliant said in its Feb. 27 annual Form 10-K filing.

In the coal area, recent developments include:

  • In March 2011, WPL purchased Wisconsin Electric Power’s 25% ownership interest (about 95 MW of generating capacity) in Edgewater Unit 5 for $38m.
  • IPL’s Dubuque plant is a 61-MW facility located in Dubuque, Iowa, that includes two units (Unit 3 and Unit 4), which were previously configured to burn either coal or natural gas. IPL filed documents with the Midwest ISO to evaluate any system reliability implications of the eventual full retirement of Dubuque. In September 2011, MISO indicated that Dubuque Units 3 and 4 are needed for system reliability purposes and must remain available for operation until required transmission upgrades are placed in service, currently expected in 2015. In 2011, IPL switched Dubuque to a gas-fired facility and no longer operates the site with coal. Specific timing for the retirement of Dubuque Units 3 and 4 will depend on operational, market and other factors.
  • IPL’s Sutherland plant is an 87-MW facility located in Marshalltown, Iowa, that includes two units (Unit 1 and Unit 3) which were previously configured to burn either coal or gas. IPL expects to switch Sutherland to a gas-fired facility in the first half of 2012. Specific timing for the retirement will depend on operational, market and other factors, the Form 10-K noted.
  • In January 2011, IPL requested approval from MISO to retire Lansing Unit 3 and Fox Lake Unit 1. In the third quarter of 2011, IPL received notification from MISO that Lansing Unit 3 and Fox Lake Unit 1 may be retired. IPL is currently evaluating its future plans for these units, including potential retirement, the Form 10-K said.

Alliant Energy’s, IPL’s and WPL’s strategic plans include investments in performance and reliability improvements at their most-efficient coal-fired units. Generation performance improvement projects are currently planned for the 2012-2015 period at IPL’s Lansing Unit 4 and Ottumwa Unit 1, and WPL’s Edgewater Unit 5 and Columbia Units 1-2.

IPL currently, within a June 2011-May 2012 planning period, has 1,392 MW of coal-fired capacity, while WPL has 1,332 MW.

Under Iowa law, IPL is required to file an Emissions Plan and Budget (EPB) biennially with the Iowa Utilities Board (IUB). Filing of annual periodic reports regarding the implementation of IPL’s compliance plan and related budget identified in an EPB is also currently required under a settlement agreement between IPL and the Office of Consumer Advocate in Iowa. In October 2010, the IUB approved the most recent EPB filed by IPL, which includes emission control projects for Ottumwa Unit 1 and Lansing Unit 4. Projects at George Neal Units 3 and 4 are included in MidAmerican Energy’s most recent EPB filed with the IUB. IPL plans to file its next EPB with the Iowa board in the second quarter of 2012.

The major IPL emissions projects are:

  • Ottumwa Unit 1 - IPL’s current EPB approved by the Iowa board in October 2010 includes plans to install a scrubber and baghouse at Ottumwa Unit 1 to reduce SO2 and mercury emissions. They are due in service in 2014.
  • Lansing Unit 4 - IPL’s current EPB approved by the Iowa board in October 2010 includes plans to install an SO2 scrubber at Lansing Unit 4 that would be due in service in 2015.
  • George Neal Units 3 and 4 – Plant operator MidAmerican Energy plans to install scrubbers and baghouses at George Neal Units 3 and 4 to be in service in the 2013-2014 period. IPL owns a 28% interest in George Neal Unit 3 and a 25.7% interest in George Neal Unit 4.

The major WPL projects are:

  • Edgewater Unit 5 - In May 2010, WPL received an order from the PSCW authorizing the installation of an SCR at Edgewater Unit 5 to reduce NOx. Construction began in the third quarter of 2010 and the SCR is due in service in 2013. WPL’s current environmental compliance plan also includes a scrubber and baghouse at Edgewater Unit 5 to reduce SO2 and mercury emissions. WPL currently plans to file an application with the PSCW for the projects in 2012 and is targeting the scrubber and baghouse to be in service in 2017.
  • Columbia Units 1 and 2 - In February 2011, WPL received approval from the PSCW to install scrubbers and baghouses at Columbia Units 1 and 2 to reduce SO2 and mercury emissions, respectively. The scrubbers and baghouses are due in service in 2014.

Alliant outlines coal procurement strategy

Coal is the primary fuel source for Alliant Energy’s, IPL’s and WPL’s internally generated electric supply and generally represents approximately 50% to 55% of their total sources of electric energy. Alliant Energy, through Corporate Services as agent for IPL and WPL, has entered into contracts with different suppliers for coal in 2012 and 2013. As of Dec. 31, 2011, existing contracts about 80% and 50% of IPL’s and WPL’s estimated coal supply needs for 2012 and 2013, respectively. Alliant Energy, IPL and WPL expect to meet remaining coal requirements from either future contracts or purchases in the spot market.

Alliant Energy, through its subsidiaries Corporate Services, IPL and WPL, also enters into various coal transportation agreements to meet its coal supply requirements. As of Dec. 31, 2011, existing coal transportation agreements cover about 100%, 50%, 50% and 15% of IPL’s estimated coal transportation needs for 2012 through 2015, respectively, and 100%, 100%, 100% and 30% of WPL’s estimated coal transportation needs for 2012 through 2015, respectively.

Nearly all of the coal utilized by IPL and WPL is from the Wyoming Powder River Basin. A majority of this coal is transported by rail directly from Wyoming to IPL’s and WPL’s plants, with the remainder transported from Wyoming to the Mississippi River by rail and then via barges to the final destination. As protection against interruptions in coal deliveries, IPL and WPL strive to maintain average coal inventory supply targets of 25 to 50 days for plants with year-round deliveries and 30 to 150 days (depending upon the time of year) for generating stations with seasonal deliveries. Actual inventory averages for 2011 were 43 days for generating stations with year-round deliveries and 103 days for generating stations with seasonal deliveries.

Average delivered fossil fuel costs are expected to increase in the future due to price structures and adjustment provisions in existing coal contracts, rate structures and adjustment provisions in existing transportation contracts, fuel-related surcharges incorporated by transportation carriers and expected future coal and transportation market trends. Existing coal commodity contracts with terms of greater than one year have fixed future year prices that generally reflect recent market trends. A few of Alliant Energy’s existing coal contracts have provisions for price adjustments should specific indices change.

Rate adjustment provisions in older transportation contracts are primarily based on changes in the Rail Cost Adjustment Factor as published by the U.S. Surface Transportation Board. Rate adjustment provisions in more recent transportation contracts are based on changes in the All Inclusive Index Less Fuel as published by the Association of American Railroads. These more recent transportation contracts also contain fuel surcharges that are subject to change monthly based on changes in diesel fuel prices.

Barry Cassell
About the Author

Barry Cassell

Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 26 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.

Barry can be reached at barryc@pennwell.com.

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