City to collect emissions credits from Sikeston Power Plant

Thursday, December 27, 2007 | 5:00 p.m. CST; updated 1:57 p.m. CDT, Sunday, July 20, 2008

COLUMBIA — An amendment to Columbia’s contract with the Sikeston Power Plant allows the city to collect credits for nitrous oxide and mercury emissions, though there’s little possibility of any revenue.

The City Council on Dec. 17 unanimously passed the amendment, which clarifies that the city owns any credits attached to the energy it buys from Sikeston. Geoff Comer, a systems analyst for the Sikeston plant, called the amendment “a formality.”

Much like emission standards that limit the amount of pollutants that automobiles and other vehicles can release, the Environmental Protection Agency also limits the total amount of pollutants that power plants can emit. It does that by issuing credits to states. In Missouri, those credits are then distributed to individual utilities and power plants by the Missouri Department of Natural Resources. Those allotments are broadly based on the types of plants and the technology they employ.

One reason for the timing of the contract amendment is that the EPA beginning in 2014 will require that utility companies monitor mercury emissions. The city, like other utilities, must declare by 2009 — five years ahead of the EPA mandate — how it plans to monitor and control mercury. One of the city’s primary strategies will be to retire two aging coal-fired units at the Municipal Power Plant because retooling them to meet mercury emission caps would be too expensive, said Jim Windsor, manager of rates and fiscal planning for the Columbia Water and Light Department.

Both mercury and nitrous oxide will be among the pollutants for which credits are issued. Power plants that manage to keep emissions below their credit allotments are allowed to sell the excess to other utility companies for profit. It’s unclear whether the city might generate any profit through the new pollution credits because the price of those credits varies over time, said Aaron Basham, an environmental engineer for DNR.

Last year, prices ranged from $800 to $2,800 per ton. An EPA report published in May 2007 placed the average price at around $750 per ton.

Columbia could wait to sell any excess credits until the months of March through June, when they generally bring higher prices. Basham said utility companies often scramble to buy and sell pollution credits before the hot summer months, when more emissions accumulate and the EPA tightens credit limits.

“They’re getting prepared for the ozone season,” Basham said.

The Sikeston plant under the 2009 rules will be allowed to emit 1,556 tons of nitrous oxide and 1,211 ounces of mercury per year, according to the DNR. Its nitrous oxide emissions during the warm-weather ozone season, however, will be limited to 698 tons. Emissions from the Sikeston plant historically have been just below its allotted credits, Basham said.

The chances that Columbia would profit from the sale of new credits it receives through the contract amendment with Sikeston are remote, Windsor said. That’s because the Sikeston plant, which is more than 25 years old, probably will be making investments to upgrade its facility. The cost of the upgrades would be shared with other entities, including Columbia, that buy energy from the plant.

The city of Columbia has been under contract with the Sikeston Power Plant since 1983 and buys about a third of Columbia’s power from the coal-fired facility. The city owns 66 megawatts, or 28 percent, of the Sikeston plant’s capacity.

By comparison, the city’s Municipal Power Plant provides about 7 percent of the city’s electricity.

Columbia has profited before from the sale of pollution credits. In November 2003, for example, it sold 6,071 tons of excess sulfur dioxide credits, a regular surplus for the Municipal Power Plant, to AmerenUE for about $1.2 million, then used the proceeds to update a boiler at the plant.

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