Saturday, October 13, 2012

Consent decree reached to restart Healy Clean Coal Plant

Tim Bradner
Alaska Journal of Commerce

A deal to restart the Healy Clean Coal Plant requires Golden Valley to invest $40 million in additional emissions controls and another approximately $5 million in emissions improvements at an adjacent, smaller and older 25 megawatt coal plant.

Golden Valley Electric Association of Fairbanks and the Alaska Industrial Development and Export Authority, Alaska’s state development corporation, have worked out a consent decree with federal attorneys that could allow for a restart of a mothballed 50-megawatt new-technology coal power plant at Healy in Interior Alaska.

The plant has been idle for almost 12 years, although critical operating systems have been maintained.

The agreement is highly unusual because the Healy Clean Coal Project, or HCCP, is not operating and no violation of the Clean Air Act has occurred, sources familiar with the deal said.
However, the federal Clean Air Act does allow the government to file for an injunction to block a violation that is pending. In this case the U.S. Justice Department filed for an injunction in federal court to block the restart of the Healy plant but filed the Consent Decree at the same time.
The deal requires Golden Valley to invest $40 million in additional emissions controls in the HCCP and another approximately $5 million in emissions improvements at an adjacent, smaller and older 25 megawatt coal plant.

Golden Valley and the state authority, or AIDEA, made the deal with the U.S. Department of Justice and the Environmental Protection Agency after extended negotiations with environmental groups to forestall litigation failed.

Golden Valley spokeswoman Corinne Bradish said the consent decree will be published in the Federal Register soon and will be subject to a 30-day public review period before going to a U.S. District Court for approval. If the court approves, a decision that could come by the end of the year, Golden Valley hopes to have the plant operating in 18 to 24 months, Bradish said.

Having access to inexpensive coal-fired power is important to the Interior Alaska utility because most of its power is now generated with costly fuel oil. Coal is much less expensive than oil, and power can be generated with coal for 5 to 6 cents per kilowatt hour compared to a range of 20 to 50 cents per kilowatt hour in the utility’s oil-fueled plants depending on which unit is operating, said Kate Lamal, a consultant to Golden Valley.

The $305 million plant was built by AIDEA in 1996 and 1997 and was to be operated by Golden Valley, which was also to purchase power from the plant. The U.S. Department of Energy contributed $120 million to the project costs to demonstrate new coal combustion and emissions control technologies, with AIDEA and the State of Alaska funding the remainder of costs.

The facility operated for one year under a contract with DOE to test the technologies with different types of coal but was shut down after operating problems, unrelated to the new environmental systems, developed during a 90-day commercial operations test.

A decade of litigation followed between Golden Valley, the plant operator and regional electric utility, and AIDEA, which owned the plant and had built it.

In settling the dispute AIDEA agreed to sell the plant to Golden Valley, but when the State of Alaska issued a renewed air quality permit for an operating plant, environmental groups objected, arguing Golden Valley should initiate a more complex type of air permit as if the plant were new construction.
EPA agreed but urged the utilities to negotiate with the environmental coalition led by the Sierra Club.

Extended negotiations spanning two years included a proposal for the added environmental controls, which Golden Valley has agreed to as part of the Consent Decree, but also that the utility agree to phase out its coal plants in 20 years. Golden Valley balked at this, and the negotiations ended.
The utility then proposed the Consent Decree to EPA as a way of forestalling a lawsuit from the environmental groups, and EPA agreed to the approach.

Cory Borgeson, Golden Valley’s acting president, said, “We chose to pursue the Consent Decree option with EPA because, otherwise, there was no defined end to the air permitting process,” with almost certain appeals of the Clean Air Act’s Prevention of Significant Deterioration permit procedure.

“Very important, the Consent Decree avoids what we believe would have been lengthy and costly litigation,” Borgeson said.

Environmental groups had targeted the plant restart as part of a national effort to force the closure of coal-operating electric power plants.

In addition to new combustion and emissions systems in the original plant design, aimed at reducing sulfur dioxide (SO2) and nitrous oxide (NOX), Golden Valley agreed to install a Selective Catalytic Reduction, or SCR, system in the plant’s exhaust system to further reduce SOX and NOX, Lamal said.

The utility will spend an additional $5 million at a smaller, older 25 MW coal plant, Healy 1, that is adjacent to the 50 MW HCCP. Another $250,000 will be contributed to a wood stove change-out program operated by local municipalities, and that would reduce particulates from wood smoke, a major contributor to human health problems that occur locally during certain winter air conditions.
“A couple of things need to happen before we have the keys to the plant. One is the judge’s final approval following the 30-day public review. Second is the approval of the Regulatory Commission of Alaska,” Borgeson said.

Lamal said EPA made significant concessions in recognition of special conditions.
One is that Golden Valley will be allowed to restart the plant and operate it for 18 months without the SCR being installed.

“This will allow us to get the plant operating in a stable condition,” Lamal said. Secondly, plant shutdowns for the modifications will be done during the summer, a period of low power demand in Alaska.