BL England Re-Powering Plan Quietly Gets Dirtier (and Less Profitable)

Dirty Diesel Now Included – Less Power, More Pollution

Wittenberg Knew and Failed To Disclose New Plan Publicly

BPU’s most recent approval of the South Jersey Gas Pinelands pipeline reveals that BL England (BLE) quietly made significant changes to their plans to re-power the facility.

The changes reduce the amount of power that could be generated (from 570 MW to 447 MW, a 22% reduction) and include a new dirty diesel fuel component.

The changes also alter the economics and financial risks of the project, because less power means lower revenues, smaller profits, and a lower return on investment.

More pollution means more financial risks of future carbon regulations (e.g. Obama EPA Clean Power Plan, future carbon regulations, or a future price on carbon), which are of material interests to potential investors in this $400 million fossil dinosaur.

(add these risks to the stranded investment “death spiral” risks of declining costs of energy efficiency and renewables.)

The last minute changes proposed by BL England alter the various original justifications used to support the SJG pipeline and the BL England re-powering plan and the regulatory submissions to DEP, BPU and the Pinelands Commission that formed the basis of the pipeline and BL England regulatory approvals.

It is not clear if these changes trigger permit modification requirements, particularly by DEP and EPA under the Clean Air Act permits.

(and why is EPA looking the other way as NJ DEP extends compliance deadlines an almost 10 year old 2006 NSR enforcement ACO?)

Changes effect the air quality analysis and purported public benefits originally considered by various regulatory agencies – including DEP, BPU and the Pinelands Commission.

For example, during the course of the Pinelands Commission’s review of the SJG pipeline, SJG submitted and DEP appeared before the Commission to present an air quality analysis that alleged various benefits to the Pinelands. Those analyses were flawed, but at least they were available for review and comment by the public and the Commission.

Yet those changes by BLE were kept quiet and not disclosed publicly by Pinelands Commission Executive Director Wittenberg, despite the fact that Wittenberg knew about them.

In fact, Wittenberg not only failed to disclose those changes, she wrote a letter to BPU on December 15, 2015 – the day before the BPU’s approval – claiming that from the Pinelands Commission’s standpoint there had been “no changes”. The BPU Oder states:

On December 14, 2015, the Board received confirmation from Ms. Wittenberg that nothing submitted in connection with this proceeding before the Board has changed the Pinelands Commission staff’s prior determination in the COF that the Project is consistent with the minimum standards of the CMP. (page 5)

Yet BPU Order explains that there were in fact significant changes effecting the Pinelands:

On October 9, 2015, an updated study entitled “Benefits to Pinelands Area of B.L. England Repowering: Updated Analysis” was completed to incorporate additional changes that have occurred since the October 2013 report prepared for R.C. Cape May by PowerGEM. First, the size of the repowered facility is projected to be 447 MW instead of the 570 MW that was assumed in the prior reports.

The public had no opportunity to review and comment on these changes to the re-powering plan and alleged “benefits to the Pinelands Area”, and I doubt that the Pinelands Commission was even made aware of them by ED Wittenberg

The changes were the result of recent “reliability” incentives established by the Federal Energy Regulatory Commission (FERC) to avoid spikes in energy prices created by the cold weather snap known as the “Polar Vortex” in the winter of 2014. Cold weather increased gas and electric demand at a time that energy corporations took plants off line for maintenance. The increased demand and off line power production exposed serious flaws in the system and suggested an over-reliance on natural gas as a fuel source.

The testimony of RC Cape May explains:

R.C. Cape May’s original plan was to retire both coal fired steam boilers for units one (1) and two (2) and repower with a new state-of-the-art combustion turbine and Heat Recovery Steam Generator (“HRSG”). R.C. Cape May also intended on refueling and refurbishing Unit 3. Since Mr. Maiz’s testimony, there have been delays in the construction of the repowered facility, driven by delays in obtaining natural gas to the facility. During those delays, R.C. Cape May has continued to evaluate the repowering project considering evolving market demands, obligations related to plant reliability and a desire for energy efficiency. Based upon this analysis, R.C. Cape May still plans on repowering the facility with a new combined cycle unit utilizing the steam turbine from unit two (2) with a new state-of-the-art combustion turbine and HSRG. However, it is R.C. Cape May’s intention to retire unit three (3) rather than refuel and refurbish that unit. Further R.C. Cape May intends on incorporating the combustion of Ultra Low Sulfer Diesel (“ULSD”) as a backup fuel for the combined cycle unit to maintain reliable operations in order to meet recently approved PJM, Interconnection, LLC (“PJM”) capacity performance standards. There are several existing electric diesel generators that also will be retired. The result will be a clean, efficient, economical new combined cycle unit that will be named the Cape May Energy Center (“CMEC”). Exhibit P5-A 4:9-5:5.

RC Cape May’s testimony did not face cross examination questioning by BPU staff or Ratepayer Advocate or the Pinelands Preservation Alliance. PPA was not entitled to cross examine witnesses because BPU only granted PPA “participant” status instead of full intervenor rights.

This last minute change in the BLE re-powering plan and how it was kept from the public and the Pinelands Commission is just another example of how absurd this whole review process is and how dirty the regulatory process has become.