Coal Fleet Transition

True energy security and reliability requires having diverse resources we can call upon at any time, 24/7, when the power grid needs it. We believe this country needs an “all of the above” approach to power generation. And that includes coal.

Coal-fueled generating facilities have the ability to inventory coal onsite to supply power as required. In contrast, natural gas generating facilities rely on gas as a “just in time” fuel that is delivered in real time, without backup, unless the plant has the ability to run on dual fuels. Even in that case, the backup supply does not represent the resiliency of several days, even weeks of coal inventory on site, at a coal plant.

In a significant event that impacts the reliability of the grid, such as the 2014 polar vortex when many gas plants could not secure gas to serve customers, having sufficient on site backup inventory becomes critical. In 2014, coal units were not hindered by fuel supply, while several thousand megawatts of natural gas were out of service due to fuel supply issues.

AEP has retired about 25 percent of its coal-fueled generating capacity. The remaining coal units in the fleet are equipped (or are in the process of being equipped) with environmental controls to assure compliance with current regulations. These units provide critical 24/7 capacity and other services to the grid that ensure reliable, uninterrupted electricity for customers. At the same time, the use of coal will change in the future. Lower natural gas prices, operational cost structures and seasonal capacity needs will dictate when coal units are dispatched to serve customers.

In today’s environment, we are managing our coal fleet differently than we have before, based on the remaining life of these important assets. We want to keep them running efficiently for as long as economically possible but also ensure we are proactively assessing pending regulations and informing policies that will allow for prudent investments over reasonable timelines.

Compliance Milestone

In 2016, AEP’s coal fleet achieved compliance with federal standards that require power plants to limit their emissions of toxic air pollutants like mercury, arsenic and metals under a rule called Mercury and Air Toxic Standards (MATS). AEP installed or upgraded controls on several coal units to comply with the rule.

Investing Billions to Reduce Emissions

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AEP has made significant investments in its coal fleet – approximately $8.7 billion between 2000 and 2017 – to comply with various environmental regulations, including MATS.

Southwestern Electric Power Company’s Flint Creek Power Plant, in Gentry, Ark., completed a major environmental retrofit project and was returned to service in June 2016. The coal-fueled 528-megawatt plant began construction of the retrofit project in October 2013. The project was driven by the new MATS and Regional Haze rules.

The new equipment includes a dry flue gas desulfurization unit (DFGD or dry scrubber) with pulse jet fabric filter (commonly called a baghouse) and activated carbon injection (ACI) – all to reduce emissions of sulfur dioxide (SO2), particulate matter (PM), acid gases, mercury and other metals. The scrubber employs NID technology (novel integrated deacidification) by GE Power. In addition, an in-service date in mid-2018 is anticipated for the installation of new low-nitrogen oxide burners and overfire air, to also address the regional haze rule.

New environmental equipment at Flint Creek includes (left to right) the lime silo, NID/baghouse scrubber unit, exhaust duct to stack (above existing precipitator) and by-product silo.

SWEPCo’s Welsh Power Plant in Pittsburg, Texas, completed environmental retrofits to the 528-MW Units 1 and 3, which were placed in service in April 2016 and March 2016. Unit 2, also 528 MW, was retired in April 2016. The retrofit project was driven by the EPA’s new MATS rule. The new technology at Welsh includes ACI to reduce mercury emissions and a baghouse to capture carbon and mercury.

At PSO’s Northeastern Station (NES) Unit 3, new emissions-reducing equipment was added to comply with regulations. In April 2012, PSO entered into an agreement in principle with the State of Oklahoma, the U.S. EPA and the Sierra Club for its Environmental Compliance Plan (ECP), which was primarily focused on PSO’s compliance with EPA regulations affecting itsits fossil fuel units. The ECP’s main feature was the addition of significant new environmental controls to NES Unit 3, allowing it to operate for another 10 years, before its eventual retirement in 2026.

Because coal will continue to be important to a reliable, diverse and secure energy mix, we have planned additional investments ranging between $2.1 billion to $2.7 billion from 2018 through 2025 to comply with new environmental regulations. This ensures our ability to maintain reliable, affordable service to our customers.

One of AEP’s plants still undergoing environmental retrofit is Indiana Michigan Power Company’s (I&M) Rockport Plant in southern Indiana. I&M is seeking regulatory approval to add selective catalytic reduction (SCR) emission controls on Unit 2 of the plant. The Indiana Utility Regulatory Commission previously approved I&M’s plans to install SCR emission controls on Unit 1 at Rockport, and construction is under way. SCR has been used for decades as a proven and effective method of reducing nitrogen oxide emissions.