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As Coal Plant Teeters, Groups Mount Legal Attack

Case cites issues already pushing Wolverine to drop Rogers City project

February 13, 2012 | By Jim Dulzo
Great Lakes Bulletin News Service

Photo Clean Water Action.
  Wolverine co-op officials say new federal emission rules for mercury, arsenic, and other toxics have stalled development of the coal plant they want to build in Rogers City.

Although signs are growing that Roger City’s proposed coal-fired power plant will be cancelled, two national environmental groups are nonetheless ratcheting up legal pressure against the controversial project.

The Sierra Club and the National Resources Defense Council filed a brief  in Ingham County Circuit Court on Jan. 17 demanding that the state withdraw its permit for Wolverine Power Supply Cooperative’s “Clean Energy Venture,” a 600-MW coal- and petroleum coke-fired power plant it wants to build in a limestone quarry next to Lake Huron.

The brief was assembled by attorneys from NRDC, the Chicago-based Environmental Law and Policy Center, and the Detroit-based Great Lakes Environmental Law Center.

But in the week before the groups filed, there were strong indications that, as occurred in December with Consumers Energy’s proposed Bay City coal plant, the business case for a new coal plant in Rogers City, long criticized by coal opponents for its unrealistic cost estimates, is collapsing.

On Jan. 11, six days before the Sierra/NRDC filing, Wolverine and Wisconsin-based We Energies announced that they were discussing a deal that would make the co-op a partial owner of WE’s aging Presque Isle Power Plant, in Marquette, Mich. The deal would likely expand Wolverine’s peak generating capacity well beyond what it claimed to need when it proposed the Rogers City plant in 2006.

Then, on January 13, after informing a group of Rogers City-area leaders of the possible deal with WE, Wolverine CEO Eric Baker dropped a bombshell: New federal air emission regulations for mercury and other toxics had forced them to put the bid process for their multi-billion dollar project on hold.

“We are not convinced that we can get any vendor to guarantee an emission rate that would achieve that new proposed level,” Mr. Baker said, according to the Presque Isle County Advance. “What that means is that we are not going to move forward with the engineering…with the detailed design and bidding process because…the emission rates are virtually unachievable at this point.”

Wolverine’s move to invest in an existing power plant and suspend the Rogers City project seem to confirm two points the plant’s critics often raise: The co-op does not need to build a new coal plant to meet future demand because other, often cheaper options are readily available; and the plant design the company wants to use in Rogers City was chosen to keep costs down, not provide the best-possible pollution control.

The environmental groups’ lawsuit reflects both criticisms.

It asserts that Wolverine’s permit, issued by the Michigan Department of Environmental Quality last summer, illegally allows the construction of a new coal plant when there is no clear need to use that technology, the most polluting way to generate electricity. The brief points out that natural gas-fired generation and energy efficiency are cleaner, cheaper options.

The brief also says that, even if Wolverine proved it must depend on coal power to meet demand, the plant’s use of an older, dirtier technology so it can burn cheaper, higher-sulfur petroleum coke would violate so-called, long-standing, “best available control technology” (BACT) rules.

The filing adds that, while processing the permit, MDEQ ignored the new federal emission rules for toxics—the Mercury and Air Toxics Standards (MATS) for power plants—that Mr. Baker criticized. Those rules were proposed on May 3, two months before the state agency issued Wolverine’s permit, on June 29. They define the “maximum available control technology” (MACT) required to eliminate as much mercury and other toxic emissions as possible from new and old plants.

“Wolverine’s suspension of its Rogers City project demonstrates why MDEQ needed to consider MATS before issuing the co-op a permit,” said Andrew Armstrong, a staff attorney for ELPC. “Now, if Wolverine attempted to operate the plant as permitted by the state, they would without question be violating those federal standards.”

Buy Instead of Build
Wolverine’s response to the MATS—considering a joint venture with WE—would fit the co-op’s recent pattern: arguing it needs the Rogers City plant to replace power from its expiring contracts with downstate generators while, at the same time, purchasing permanent shares of existing power plants to accomplish the same goal.

In the past few years, Wolverine, which already owned five small natural gas “peaking” plants that produce 200 MW during high-demand periods, purchased interests in two other generators: a 340-MW peaking plant that some coal critics assert could be converted to continuous, “base load” operation; and 150 MW of base load from the Ohio Valley Electric Corporation.

In the potential new deal, Wolverine would help WE pay for state-of-the-art, MATS-mandated pollution controls in the Marquette plant in exchange for part of its 425-MW output. That could expand Wolverine’s total peak capacity to 900 MW, or more—far more than the 600 MW the Rogers City plant would provide, and almost twice the co-op’s peak-demand record, 517 MW, reached last July.

That demand could increase somewhat in the future because, in late December, Wolverine added another retail co-op—Midwest Energy Cooperative—to the four that it already sells its power to: Presque Isle Electric & Gas Co-op, Cherryland Electric Co-operative, Great Lakes Energy Cooperative, and HomeWorks Tri-County Electric Cooperative.

Adding Midwest’s approximately 35,000 members, in southwestern and south-central rural Michigan, to Wolverine’s market amounts to approximately an 11- percent increase, to 260,000 customers.

New Rules, Long Delayed
At the Rogers City meeting, Wolverine officials blamed suspension of their plant on the U.S. Environmental Protection Agency, which finalized its new MATS regulations for coal plant emissions in December.

The regulations mark the first time the U.S. has issued uniform national standards on toxic air emissions, including mercury, arsenic, cyanide, nickel, and acid gas, from coal plants.

Wolverine officials told the leaders that the new toxics rules were far too strict, had blindsided them, and led equipment vendors to say that they could not guarantee their technology would meet the new requirements.

But, legally speaking, the new rules were long overdue: In 2008, the D.C. Circuit Court struck down earlier proposed regulations for toxics, fashioned by the George W. Bush administration in response to legislation passed in 1990. The court said the proposed rules were not strict enough and ordered EPA to establish stronger ones by December 2011.

EPA delayed finalizing the new rules several times, pointing to the more than 900,000 citizen comments it received when it proposed them in May. The agency said the changes it made between May and December were small and mostly designed to make them more flexible for utilities. An EPA press release announcing the new rules said more than half the country’s existing coal plants already had the technology to meet them.

The agency also said that the combination of MATS and the newly installed Cross-State Air Pollution Rule, which some utilities are challenging in court, would prevent up to 46,000 premature deaths, 540,000 asthma attacks, 13,000 emergency room visits, and over 2 million sick days or missed work days each year, saving families, employees, and healthcare providers between $150 and $380 billion in medical costs.

EPA also said the total cost of the required upgrades would be about $9.6 billion, about $1 billion less than its original, May estimate, and that implementation would create 46,000 short-term construction jobs and 8,000 long-term utility jobs.

Some power companies said they had anticipated MATS and would be able to comply by retrofitting their largest old plants. But others said it would force them to either invest heavily in new “scrubbers” to remove such toxics or close down smaller plants, like the Marquette facility.

Wolverine officials have an additional complaint: The MATS is stricter for new plants than for existing ones, and are likely out of reach of the coal-burning technology they envision for Rogers City, known as “CFB.”

Although Wolverine CEO Baker called that a “double standard,” his company’s potential investment in cleaning up the Marquette plant would take full advantage of that less restrictive rule.

Just Not Clean Enough
Sierra Club and NRDC assert that the Rogers City plant would not only fail to meet the new MATS rules, it would also violate longstanding air emission limits for nitrous and sulfuric oxides (NOx and SOx) and fine particulates (PM 2.5), which collectively contribute to smog, acid rain, pulmonary problems, and asthma.

The reason, the brief asserts, is that the state did not require Wolverine to use newly required “maximum available control technology” (MACT) for mercury and the other air toxics, or long-required “best available technology” (BACT) for sulfur dioxide and particulates.

Instead, the state is allowing the plant to burn petroleum coke in Rogers City. That is illegal, they say, because pet coke contains more sulfur than coal and requires an older, dirtier burning technology—namely, CFB—and so would violate BACT requirements.

The brief points to other U.S. plants using CFB to burn coal, but not petroleum coke, that are significantly cleaner than Wolverine’s proposed plant—including one in Pennsylvania that emits 30 times less mercury because it uses a different variety of coal. The suit argues that Wolverine must meet the same, cleaner standard by switching to less polluting varieties of coal.

The citizen groups also re-assert the point they used in initially convincing the state to deny Wolverine’s permit, in May 2010: The co-op simply does not need to build a coal plant to meet its future demand, because other, cleaner, likely cheaper alternatives are readily available.

A court ordered MDEQ to reconsider its original permit denial, but the groups assert that MDEQ misinterpreted that ruling. Granting a new permit without considering the necessity of using coal and linking it to how badly coal burning damages air quality, was, the brief concluded, “arbitrary, capricious, or otherwise not authorized by law.”

MDEQ and Wolverine have until March 19 to file their own briefs. A hearing is tentatively set for March 23 before Ingham County Circuit Court Judge Rosemarie Aqualina.

Senior Editor Jim Dulzo writes about clean energy and coal issues for the Michigan Land Use Institute. Reach him at jimdulzo@mlui.org.

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