Natural Gas Fuel Switching Consequences for Public Power Utilities

2012-2017

Theresa PughApril 14, 2010

APPA CEO Climate Change Task Force

Retrofit existing fired power plant with Hazardous Air Pollutant Controls (Minimum of Scrubbers or Baghouses Activated Carbon & ESP) and CCS meeting roughly natural gas standard for CO2

Fuel Switch to Natural Gas (and deal with hedging, build new infrastructure & price volatility issues)

Door #1 Door #2 Door #3

Use Clean Air Act’s NSPS for reasonable, available and cost effective energy efficiency (DSM) and renewables [heavy lift]

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Possible Timeline for Environmental Regulatory Requirements for the Utility Industry

Ozone

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Beginning CAIR Phase I Seasonal NOx Cap

HAPs MACT proposed

rule

Beginning CAIR Phase II Seasonal NOx Cap

Revised Ozone NAAQS

Begin CAIR

Phase I Annual

SO2 Cap

-- adapted from Wegman (EPA 2003) Updated 2.15.10

Beginning CAIR Phase II Annual

SO2 & NOx Caps

Next PM-2.5

NAAQS Revision

Next Ozone NAAQS Revision

SO2 Primary NAAQS

SO2/NO2 Secondary

NAAQS

NO2

Primary NAAQS

SO2/NO2

New PM-2.5 NAAQS Designations

CAMR & Delisting Rule vacated

Hg/HAPS

Final EPA Nonattainment Designations

PM-2.5SIPs due (‘06)

Proposed CAIR Replacement

Rule Expected

HAPS MACT final rule expected

CAIR Vacated

HAPS MACT Compliance 3 yrs

after final rule

CAIR Remanded

CAIR

Begin CAIR

Phase I Annual

NOx Cap

PM-2.5 SIPs due (‘97)

316(b) proposedrule expected

316(b) final ruleexpected

316(b) Compliance3-4 yrs after final rule

Effluent Guidelines

proposed ruleexpected

Water

Effluent GuidelinesFinal rule expected Effluent Guidelines

Compliance 3-5 yrs after final rule

Begin Compliance Requirements

under Final CCB Rule (ground water monitoring, double monitors, closure,

dry ash conversion)

Ash

Proposed Rule for CCBs Management

Final Rule for CCBs Mgmt

Final CAIR Replacement

Rule Expected

Compliance with CAIR

Replacement Rule

CO2

CO2 Regulation

Reconsidered Ozone NAAQS

PM2.5

Retrofit Decisions Driven by HAPs & CAIR Regulations Before CO2

CURRENT CAPITAL COST AND COST-EFFECTIVENESS OF POWER

PLANT EMISSIONS CONTROL TECHNOLOGIES

Prepared by J. Edward Cichanowicz

Prepared for Utility Air Regulatory Group

January 2010

“The capital cost of retrofitting either wet FGD or SCR increased over the recent 4-year period, from about 2005 through 2009, and specifically for a 500 MW plant, by approximately $50-65/kW. This same rate of cost escalation is anticipated to continue for the next 4-6 years, elevating the cost of equipment installed in 2014 and 2015 for a CAIR Phase 2 mandate and the anticipated HAPs MACT rule.”

Update screen shot

Current Natural Gas Pipeline

Current U. S. Natural Gas Storage Maps (no differentiation for storage capacity)

Table 6: Gas Burn by State if Existing Coal-Fired MW Converted to Natural Gas State 2008 Gas

Use Additional Use If Coal Converted

Coal Use As % of Current Gas Use

Alabama 0.404 0.533 132%

Alaska 0.342 0.005 1%

Arizona 0.4 0.246 62%

Arkansas 0.235 0.166 71%

California 2.45 0.018 1%

Colorado 0.505 0.223 44%

Connecticut 0.167 0.026 15%

Delaware 0.048 0.045 94%

Florida 0.943 0.479 51%

Georgia 0.425 0.614 144%

Hawaii 0.003 0.009 316%

Idaho 0.089 0.001 1%

Illinois 1.001 0.739 74%

Indiana 0.551 0.906 164%

Iowa 0.32 0.274 85%

Kansas 0.283 0.23 81%

Kentucky 0.225 0.694 308%

Louisiana 1.239 0.158 13%

Maine 0.061 0.004 7%

Maryland 0.196 0.22 112%

Massachusetts 0.374 0.075 20%

Michigan 0.779 0.542 70%

Minnesota 0.401 0.238 59%

Additional Use If Coal Use As % of

State 2008 Gas Use Coal Converted Current Gas Use

Mississippi 0.355 0.113 32%

Missouri 0.296 0.497 168%

Montana 0.076 0.107 140%

Nebraska 0.168 0.134 80%

Nevada 0.265 0.116 44%

New Hampshire 0.071 0.026 36%

New Jersey 0.615 0.094 15%

New Mexico 0.247 0.184 75%

New York 1.18 0.18 15%

North Carolina 0.243 0.558 230%

North Dakota 0.063 0.179 283%

Ohio 0.792 1.002 126%

Oklahoma 0.67 0.241 36%

Oregon 0.268 0.025 9%

Pennsylvania 0.75 0.861 115%

Rhode Island 0.089 0 0%

South Carolina 0.17 0.272 160%

South Dakota 0.064 0.02 31%

Tennessee 0.23 0.433 188%

Texas 3.546 0.893 25%

Utah 0.224 0.214 95%

Vermont 0.009 0 0%

Virginia 0.299 0.261 87%

Washington 0.298 0.061 21%

West Virginia 0.111 0.646 580%

Wisconsin 0.409 0.299 73%

Wyoming 0.143 0.259 182%

Switching from Coal to Natural Gas: Understanding the Environmental and Operational Impacts

At APPA National Conference, June 19-23, 2010, Orlando, FLCost to Members: $375; Cost to Non-Members: $750

Sunday, June 20, 2010 - Full day • 8:30 a.m. – 4:30 p.m.The U. S. Environmental Protection Agency’s “perfect storm” of new environmental regulations (air, climate, water and waste) may lead many utilities to switch from coal to natural gas for base load energy production to reduce carbon dioxide, sulfur dioxide and fine particulate matter. While natural gas may be an easier environmental choice, the utility’s operational issues may grow far more complex when producing electricity with natural gas. Operational issues range from anticipating how much gas to use in lieu of coal, the purchasing (“nomination”) process, natural gas transportation issues, and local storage when the gas is not used within 24 hours. The speaker will address all aspects of natural gas use, from nomination, to setting up procurement operations, to re-sale of natural gas in the market if storage is not available.

Instructors: Ted Chapman, Director, Standard & Poor's, Dallas, Texas; Catherine Elder, Senior Associate, Aspen Environmental Group, Sacramento, Calif.; Doug Hunter, General Manager, Utah Associated Municipal Power Systems, Salt Lake City, Utah; and Joanie Teofilo, Vice President, Risk Control & CRO, The Energy Authority, Jacksonville, Fla.

http://www.appanet.org/events/annualeventdetail.cfm?ItemNumber=26074&sn.ItemNumber=0

APPA Contacts

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CO2, EPA liaison, CAA, & new generation (including renewables)Theresa Pugh Director, Environmental Services202-467-2943TPugh@APPAnet.org

GHG Reporting, 316(b), biomass and effluent guidelines

J.P. BlackfordEnvironmental Services Engineer202-467-2956JPBlackford@APPAnet.org