A municipal utility in Florida has been granted by city commissioners its request to shut down a coal-fired power plant more than three years earlier than planned.
Because the earlier decommissioning of unit 3 of the C.D. McIntosh Jr. plant would leave the city of Lakeland, Fla., unable to fully meet power demand until new generation comes online, the commissioners also approved a power purchase agreement between city-owned utility Lakeland Electric and another Florida public power provider, the Orlando Utilities Commission. Utility spokesperson Cathryn Lacy confirmed the commission's unanimous decision in a Jan. 25 email.
Local newspaper The (Lakeland, Fla.) Ledger first reported the authorizations.
McIntosh Unit 3, in Polk County, Fla., and with a nameplate capacity of 363.8 MW, came online in 1982, according to S&P Global Market Intelligence data. The Orlando Utilities Commission, which itself intends to exit coal-fired generation by 2027, owns 40% of the unit.
In May 2019, Lakeland Electric decided to shut down the unit by the fall of 2024. But on Dec. 22, 2020, the utility announced through a press release that it had decided to further accelerate the decommissioning, to March 31, 2021.
"Our timeline for shuttering this unit has been by Fall 2024 or sooner. As we progressed this year, it became apparent that the risk was too great to operate the unit for an extended period," Lakeland Electric General Manager Joel Ivy said in the December 2020 press release.
The utility said the plant was becoming less reliable to operate and at the same time more expensive. Its sources of coal in 2020, according to Market Intelligence data, were the MC No. 1 Mine in Franklin County, Ill., owned by Murray Energy Corp. and Foresight Energy LP, and Sev.en Energy AG's Kentucky River Loading mine in Perry County, Ky.
To replace the coal unit's generation, Lakeland Electric said in the press release that it would add five natural gas-fired units, touting the assets as being more efficient than the coal units. Lakeland Electric also said that the units would be a better backup for solar-powered generation, of which the utility said it plans to add a "significant" amount of by 2024 alongside battery storage.
"With this plan, the utility is on track to reduce carbon emissions by 67% since 2001," the December 2020 press release noted.
But until that additional generation comes online in mid-to-late 2023, Lakeland Electric plans to "use its other natural-gas, diesel, and solar power generation capacity along with demand management, interruptible load, and power purchase agreements," such as the approved agreement with the Orlando Utilities Commission, to meet its demand, according to the December 2020 press release.
According to the power purchase agreement attached to a commission memo, Lakeland Electric will purchase from the Orlando Utilities Commission up to 125 MW for a cost of $23.4 million, inclusive of transmission costs, for an initial three-year term running between April 1, 2021, and Dec. 31, 2023. Actual energy costs are estimated in the memo to be $650,000 in 2021.
The utilities are able to extend the agreement for an additional year if needed.
The commission made its decision at its Jan. 19 meeting, according to a city commission agenda.
