Northern States Power Co, the Minnesota-based unit of Xcel Energy, determined that the most cost-efficient option for the future of its 30-year-old Sherburne County power plants was to simply do nothing.
The Sherburne County (Sherco) generating facility in Becker, Minnesota, is the company’s largest power plant in the Midwest, with its three units capable of providing a total of 2400MW of electricity.
Units 1 and 2, both more than 30 years old, have a production capability of 750MW each for total capacity of 1500 MW and provide approximately 20% of the electricity used by the Xcel’s Minnesota customers each year.
Late last year, the state’s public utility commission directed the company to prepare a study that examined the cost of the continued operation of Sherco 1 and 2 as well as evaluating retrofitting and retirement scenarios.
“The cost and timing of carbon regulation is a key driver of the results,” Xcel said in the study, which was filed with the PUC on Monday.
“Yet it is unknown what kind of carbon policy will ultimately be adopted and how that that policy will affect existing coal-fired power plants like Sherco 1 and 2.”
Xcel said that while timing was uncertain, it anticipated that carbon reduction technology would be required late this decade or sometime the following decade.
“This uncertainty is particularly relevant because it is these regulatory factors that drive when a decision on the future of Sherco 1 and 2 needs to be made and the cost-effectiveness of the various scenarios.
However, the company said it had not identified factors that action on the units should be taken immediately.
“The company believes the most prudent course of action at this time is to continue to operate Sherco 1 and 2 as we await greater clarity and certainty around the development of environmental regulation and the resulting timing and costs.
“This strategy aligns the timing of a decision on the future of Sherco 1 and 2 with the availability of more complete information,” it said.
Xcel said it was investing $50 million in the units, including adding mercury controls next year and beginning work on a program to improve sulfur-dioxide and particulate collection.
The study found it would cost about $1.7 billion to replace units 1 and 2 with combined-cycle natural gas equipment. Installing “selective catalytic reduction”, a top-shelf pollution control technology, in both units would cost nearly $400 million. Either move would have a significant impact on customer rates, Xcel said.
The NSP Electric System serves over 1.6 million electric customers in Minnesota, North Dakota, South Dakota, Wisconsin and Michigan.
Together, NSP’s generating plants have a net maximum capacity of over 8300MW from a variety of fuel sources including everything from coal and natural gas to nuclear fuel, water, wind and biomass.
Despite the company’s energy diversity, its use of coal has received a great deal of criticism from environmental groups.
A coalition of environmental groups last year sued the Environmental Protection Agency for not enforcing air pollution rules on the Sherco generators. The coalition wants the courts to force the EPA to require Xcel to cut emissions from the units. The lawsuit is ongoing.
