FERC okays waiver related to shutdown of six Virginia Electric coal units

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The Federal Energy Regulatory Commission on March 26 granted a waiver to Virginia Electric and Power d/b/a Dominion Virginia Power related to the upcoming deactivation by the end of this year of coal-fired units at the Chesapeake and Yorktown power plants.

On Jan. 27, this Dominion Resources (NYSE: D) subsidiary filed a petition for limited waiver of the deadlines for the must-offer exception request set forth in Section 6.6(g) of Attachment DD of the PJM Interconnection Open Access Transmission Tariff. Specifically, VEPCO sought a waiver for Chesapeake Energy Center Units 1-4 and Yorktown Units 1-2 to secure an exception to the must-offer requirement for the units from the base residual auction commencing May 2014 and for the 2017-18 delivery year.

VEPCO is the owner of the Chesapeake Energy Center generation station, which includes four coal-fired units with a total rated net demonstrated capacity of 576 MW, located in Chesapeake, Va. VEPCO is also the owner of the Yorktown station, which includes two coal-fired units with a total rated net demonstrated capacity of 323 MW, located in Yorktown, Va.

VEPCO told FERC that it made the determination to deactivate the units because their operation is no longer economically justifiable, in part because they require additional environmental controls to comply with the U.S. Environmental Protection Agency's Mercury and Air Toxics Standards (MATS), which have an initial compliance deadline in April 2015.

VEPCO said it timely submitted and received an exemption for the units for the 2015-2016 base residual auction and for the 2016-2017 base residual auction. However, VEPCO said it inadvertently did not submit its request for exception for the 2017-2018 base residual auction until Jan. 17, 2014, so therefore it needs a limited waiver of Section 6.6(g) of Attachment DD of the Tariff.

VEPCO explained that this request reflects the deactivation filing submitted to PJM and the PJM Independent Market Monitor (IMM) stating that the units would be deactivated on or around Dec. 31, 2014, and that it is necessary to allow PJM and the IMM to process VEPCO's request for an exception for the units to the must-offer requirement for the 2017-2018 base residual auction.

Said the March 26 FERC approval: “After discovering its error, VEPCO timely submitted a final exception request for the Units. VEPCO plans to deactivate the Units on or around December 31, 2014 and has already submitted and received an exemption for the Units for both the 2015-2016 base residual auction and the 2016-2017 base residual auction. Therefore, we find that granting waiver will correct an error made in good faith. We also find it appropriate to grant this one-time waiver of the deadline for submitting a preliminary exception request for delivery year 2017-18 for the Units because of the limited scope of VEPCO's request and because the waiver will allow VEPCO and PJM to remedy a concrete problem of otherwise having to offer electric energy from its units that are to be deactivated. We further find that granting the waiver will have no undesirable consequences for PJM or any other third parties. We note that no party has opposed the request.”

VEPCO has said for some time that it plans to shut the Yorktown and Chesapeake coal units for MATS compliance. Also for clean-air reasons, it recently converted three small coal-fired plants to burning biomass, and is converting the Bremo Bluff coal plant to natural gas.

This article was republished with permission from GenerationHub.

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