2010 Moores Park Steam Production Replacement Proposal

Presented to the BWL Committee of the Whole Meeting July 13, 2010

Central Steam History

BWL has supplied central steam since 1919 At its peak in 2002, BWL customers used 2,500,000 Mlbs. annually Currently we have approximately 225 customers in downtown Lansing and GMs Lansing Grand River Plant Current peak demand is approximately 300,000 lbs. of steam per hour Annual customer use of 800,000 mlbs. annually

Central Steam System

Central Steam system composed of two parts: Moores Park steam production plant and a distribution system Moores Park production plant is located adjacent to Eckert power plant Consists of four coal fueled stoker boilers
Three boilers are 55 years old One unit 43 years old

Distribution system comprised of two geographical areas

Downtown Lansing Previous GM plants 2, 3, and 6

Moores Park Steam Production Plant

Plant is in need of substantial maintenance expenditures
Boiler external surface replacement, major equipment replacement, controls upgrade, etc. Estimated cost at least $32 million

Environmental Retrofits
ICI Boiler MACT NSR/BACT Greenhouse gas tailoring rule

Estimated cost to comply with environmental regulations between $35 and $107 million Expenditures do not guarantee compliance with future air emission requirements

Electric Generation Requirements

2008 IRP identified an electric generating capacity need beginning in 2016 Public Act 295 adopted in 2008, requires renewable energy and energy efficiency programs Numerous new environmental regulations being drafted and proposed for coal fired electric generating plants
CAIR EGU MACT Greenhouse gas tailoring rule Coal combustion residue rule

Expanded energy efficiency and renewable energy programs will need to be supplemented with flexible generation options

Steam Production Options

Make major investments to maintain Moores Park in an operational state Replace Moores Park with a LM 6000 class natural gas combined cycle combined heat and power (CHP) plant Replace Moores Park with a LM 3500 class natural gas combined cycle CHP plant Replace Moores Park with three natural gas fueled boilers

Financial Study
Study options for steam production over the next 25 years Include both steam production and electric generation from Eckert units 1, 2, and 3 Financial study incorporates capital, operating, environmental, and other costs Lowest lifecycle costs come from LM 6000 class CTs option

Net Present Value of Steam Production Options

Net Present Value of Revenue Required for Options (in thousands of 2013$)
Retain Moores Park Steam System Revenue Requirements Large CHP Small CHP Gas Boilers

990,081

885,103

892,796

1,066,489

Difference

104,978

Base

7,694

181,386

Percentage Reductions in Selected Emissions from Combined Cycle Cogeneration Plant

Emission/ Facility Moores Park NOx 94% 94% SOx 99% 100% Mercury 95% 97% Carbon Dioxide 50% 70%

Moores Park & Eckert 1,2 & 3

Advantages of CHP Option

It is a cost-effective replacement for the steam production from the Moores Park facility It provides fuel diversification, which helps manage fuel and air emissions related risks It will offset the electric generating capacity and provide operational flexibility It complements the BWLs expanded energy efficiency and renewable energy initiatives It represents a major step in reducing the BWLs greenhouse gas emissions by 20% by 2020

Thank You
Questions?