20140903Third Quarterly Report.pdf

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An IDACORP Company
LISA D. NORDSTROII'I
Lead Counsel
lnordstrom@ida hooower. com
September 3,2014
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Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. IPC-E-13-16
Selective Catalytic Reduction ('SCR") Controls on Jim Bridger Power Plant
("Bridger") Units 3 and 4
Dear Ms. Jewell:
ln Order No. 32929, the ldaho Public Utilities Commission ("Commission") directed
ldaho Power Company ("Company") to submit quarterly reports updating the Commission
on any changes to environmental policy or regulations until such time as the Bridger
upgrades are installed and placed in service. The enclosed materials indicate that the
Company still expects the SCRs on Units 3 and 4 will be placed in service by December 31,
2015, and December 31 , 2016, respectively.
Please note that the attachment to this report is commercially sensitive and if
disclosed freely could subject ldaho Power or its customers to risk of competitive
disadvantage or other business injury. Consequently, the attachment will be provided
separately to those parties that have signed the Protective Agreement in this matter. The
undersigned attorney, in accordance with RP 233, certifies that this monthly report contains
information that is a trade secret or privileged or confidentia! as described in ldaho Code $
9-340, ef seg., and $ 48-801, ef seg., and as such is exempt from public inspection,
examination, or copying.
Very truly yours,
/<,*Q.%t^U,.*
Lisa D. NordstroYn
LDN:kkt
Enclosurescc: Service List
RA fiIes
Legalfiles
Tim Tatum
Kelley Noe
1221 W. ldaho 5t. (83702)
PO. Box 70
Boise, lD 83707
3rd Quartertv Report for the Jim Bridqer SGR Upqrade at Units 3 and 4
September 3. 2014
This quarterly report provides an update as to the current status of environmental policies or
regulations that are relevant to the construction of the Selective Catalytic Reduction ("SCR')
controls at Jim Bridger Units 3 and 4 as well as a status update on ldaho Power Company's
("ldaho Powe/'or "Company'') efforts on performing a new Coal Unit Environmental lnvestment
Analysis ("Coal Study"). This report also provides a construction progress update for the SCR
installation project through July 31 , 2014, and a schedule of major construction milestones.
Finally, a summary of actual project costs and a forecast of total project costs as of June 30,
2014, are provided as a confidential attachment to this report.
Environmental Regu :
Clean Air Act Section 111(d) for existinq power plants
On June 2, 2014, the Environmental Protection Agency ("EPA') released its draft proposal to
regulate COz emissions from existing power plants. !n the rule, the EPA proposes enforceable
CO2 performance goals that are based on a bottom-up, multi-factor analysis that reflects a
system-wide approach including natural gas re-dispatch, renewable energy deployment, and
demand-side energy efficiency. The goals take the form of state-wide carbon intensity rates for
the state's electric power sector. Each state's goal reflects an emissions target (stated as a
lbs/MWh of generation) that EPA has determined to be reasonable based upon the theoretical
application of the "Best System of Emission Reduction" ("BSER") for fossil-fueled power plants.
EPA proposes that the BSER for existing power plants is the combination of four emission
reduction strategies, which the Proposed Rule terms "building blocks." The factors (or "building
blocks") used in calculating the performance goals include:
1. Heat rate improvement at existing coal-fired power plants. EPA sets a goal of a six
percent heat rate improvement, relative to 2012 average rates, at existing coal-fired
power plants.2. lncreased utilization of existing natura! gas combined cycle ("NGCC") units. EPA
calculates a potential emission rate improvement for each state assuming all existing
and under construction NGCC (as of the proposal) have a capacity factor of 70 percent.
The calculated increase in NGCC generation is used to back out megawatt-hours
('MWh') from coal-fired steam boilers using 2012 generation data.3. Gontinued and increased operation of zero-emitting generation. EPA calculates the
generation (in MWh) of electricity associated with existing and projected renewable
energy as well as "at risk" and under construction nuclear capacity. The calculated
generation by zero-emitting sources in 2030 is added to the denominator of the goal,
resulting in a lower emission rate.4. Increased demand-side energy efficiency. Based on its analysis of existing energy
efficiency program savings, EPA estimates that 1.5 percent annual incremental savings
is achievable by all states given adequate time. Estimated cumulative savings for each
state in 2030 is added to the denominator of the goal, resulting in a lower emission rate.
The proposal directs states to submit plans for meeting their goals. States may also work
together to submit a single, coordinated multi-state plan. States and multi-state groups have a
June 2016 deadline for submitting their plans, with the possibility of a 1- or 2-year extension
depending on the plan type. Under the proposed rule, each state's plan must be approved by
the EPA, based on modeling projections by the state that demonstrate, to the agency's
satisfaction, that the plan will be adequate to meet EPA's determination of the state's interim
and final goals. State plans do not need to rely upon the four building block measures EPA
used to construct each state's goal. Rather, each state has relatively broad discretion to
determine the policy measures on which it will rely to meet its goal.
Under the EPA's calculations, by 2030 the state of ldaho must achieve CO2 emission reductions
of 33 percent (based on 2012 emission data). The only building blocks applicable to the state of
ldaho for COz emission reductions are building blocks 3 and 4 because the state of ldaho does
not have any coal-fired generating units.
Comments on the proposed rule are due October 16, 2014, and ldaho Power is working
alongside a number of state agencies to draft ldaho-specific comments and the Coalition for
lnnovative Climate Solutions to draft more broad-based comments, both of which will be
submitted to the EPA on or before October 16,2014. The Company does not know the extent
to which the rule will affect the Jim Bridger plant; however, the Company will be modeling a
variety of COz cost scenarios in its updated Coal Study that will evaluate the cost-effectiveness
of the SCRs under the pending regulation.
The final rule is expected by June 2015 with a deadline of June 2016 for the states to issue their
State lmplementation Plans ('SlP'). lt is currently estimated that approval or disapproval, from
the Federal EPA, of the SlPs will occur in the 2016-2018 timeframe.
Clean Water Act Section 316(b)
On August 15,2014, the final 316(b) rule: "National Pollution Discharge Elimination System-
Final Regulations To Establish Requirements For Cooling Water lntake Structures at Existing
Facilities and Amend Requirements at Phase I Facilities" was published in the Federal Register.
To determine what, if any, actions will be required to comply with this regulation, PacifiCorp and
ldaho Power will cause studies to be performed at the Jim Bridger Power Plant prior to
consultation with the State of Wyoming Department of Environmental Quality. Because the Jim
Bridger Power Plant utilizes a closed-cycle cooling system (cooling towers), this rule is initially
expected to have a minimal impact to the plant.
ldaho Power's Coa! :
An update to the Coal Study is in progress and will be included with the filing of the 2015 lRP.
Gonstruction Progrc :
The project to install the SCR controls on Jim Bridger Units 3 and 4 is moving forward as
planned and is on schedule to meet the required completion dates. The following section
provides a high level description of the construction activities since the last quarterly report
(which provided an update through May 30, 2014).
Babcock & Wilcox (the Engineering, Procurement, and Construction Contractor) received and
completed review of the final test report from Nels Consulting Services on the physical flow
model test. This report has been provided to PacifiCorp and ldaho Power. The report
confirmed that the existing design will meet the performance criteria for critical flow areas in the
SCR flues and catalyst.
2
The NO" emission monitoring system passed factory acceptance test on July 30, 2014.
The SCR module fabricator has shipped 10 of the 40 SCR modules for Unit 3. Shipments have
been delayed a few weeks due to lack of space in the SCR storage (laydown) space; however,
most of the modules have been completed and have either shipped or are ready to ship. This
delay will not impact the in-service date of the Unit 3 SCR.
Excavation and foundation work has begun in the ammonia receiving area storage tank,
mechanical equipment skids, and electrical building foundation.
All Unit 3 structural steel has been received from Merrill lron and is onsite. Erection of Unit 3
structural steel continues at a pace to keep the project on schedule. At the end of July 2014,
over 45 percent of the Unit 3 steel tonnage has been set. Assembly of the Unit 3 SCR inlet flue
module continues; the Unit 3 outlet flue module assembly has been completed and the outlet
flues have been installed on the support structure.
Unit 4 structure foundations were completed on July 8m and steel erection started on August 18,
2014. All Unit 4 structural steel baseplates have been received onsite.
All other equipment deliveries continue to remain on schedule.
Schedule:
The project remains on schedule to comply with the required completion dates with the following
major milestones:
. Physical Flow Model Demonstration - Completed May 8,2014o Unit 3 SCR Area Foundation lnstallation - Completed May 30,2014. Unit 4 SCR Area and lnduced Draft fan Foundation lnstallation - November 14,2Q14o Unit 3 Fall Outage Start - September 5,2015o Unit 3 Mechanical Completion - November 5, 2015. Unit 3 Compliance deadline - December 31,2015. Unit 4 Fall Outage Start - September 3, 2016o Unit 4 Mechanical Completion - November 3, 2016o Unit 4 Compliance deadline - December 31,2016
Conclusrron:
The installation of SCR controls at Jim Bridger Units 3 and 4 remains on schedule and under
budget. Based on what is known today, the SCR investments continue to be the most cost-
effective means of ensuring that Units 3 and 4 comply with state and federal emissions
regulations. Further, the Company continues to believe that the Jim Bridger SCR investments
represent the lowest cost and least risk option for serving future customer demands.
3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 3'd day of September 20141 served a true and
correct copy of the within 3RD QUARTERLY REPORT FOR THE JIM BRIDGER SCR
UPGRADE AT UNITS 3 AND 4, upon the following named parties by the method
indicated below, and addressed to the following:
Commission Staff
Kristine A. Sasser
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
lndustrial Gustomers of ldaho Power
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
ldaho Gonservation League
Benjamin J. Otto
ldaho Conservation League
710 North Sixth Street
Boise, ldaho 83702
Snake River Alliance
Dean J. Miller
McDEVITT & MILLER LLP
420 West Bannock Street (83702)
P.O. Box 2564
Boise, ldaho 83701
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g req @ richa rdso nad a ms. com
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CERTIFICATE OF SERVICE
Ken Miller, Clean Energy Program Director
Snake River Alliance
P.O. Box 1731
Boise, ldaho 83701
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CERTIFICATE OF SERVICE