ESI & Crowder's Coal to Wood Conversion Project for Dominion Is Ahead of Schedule and Under Budget

Dominion coal-to-biomass conversions on time, under budget

Savings in EPC costs have put these projects under budget

By Barry Cassell

The biomass conversions of the coal-fired Altavista, Hopewell and Southampton power plants are generally proceeding on schedule and under budget, and are due to be operational by December 2013, said Virginia Electric and Power in June 29 testimony filed at the Virginia State Corporation Commission.

VEPCO, doing business as Dominion Virginia Power, won commission approval for the coal-to-biomass conversions of these three small plants in March. The June 29 filing was the company's annual update filing with respect to its Rider B for the major unit modifications to the three plants.

The contract to provide engineering, procurement, and construction (EPC) services was executed with Crowder Construction in June 2011. The contract to engineer and supply required boiler modification equipment was executed with Babcock and Wilcox in August 2011. As of March 31, all major equipment has been procured and engineering is proceeding according to schedule, the June 29 application noted.

The applications for the required air permit modifications were submitted to the Virginia Department of Environmental Quality in May 2011. In August and September 2011, the company held public briefings regarding these air permit applications in each community. Pre-construction site remediation activities commenced at Altavista in 2011 and are expected to be completed to allow for construction activities anticipated to begin at the site in the summer of 2012.

Costs have actually decreased

The total forecasted costs for the conversions have decreased $8.4m or 5.1% to $157.4m due to lower than planned fixed price EPC contractor costs, the utility reported. There have also been cost variances from the original estimates both upward and downward within specific cost categories and subcategories, as would be expected for a project of this size and complexity.

The commission on March 16 approved the plan to convert these plants. The utility, a unit of Dominion Resources (NYSE: D), had asked the commission to amend and reissue certificates of public convenience and necessity, for approval of the conversions, and for approval of a rate adjustment clause to recover costs associated with the proposed conversions.

Once completed, the conversions would decrease the net capacity rating for each facility from 63 MW to 51 MW, but increase the expected energy production of the converted power stations compared to continued coal operations. In order to qualify for certain federal production tax credits, the company wants to put the converted plants in commercial operation by Dec. 31, 2013.

About the Author

Barry Cassell

Chief analyst, coal sector. Cassell has covered the coal industry for more than 23 years, most recently as editor of SNL Energy's Coal Report. He was formerly with Coal Outlook for 15 years as the publication's editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. Cassell has a bachelor's degree from Central Michigan University.

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