Power Engineering - NRG Energy lashes out against TXU's IGCC comments

12 January 2007 -- NRG Energy issued a statement yesterday lashing out against TXU Corp.'s public statements against integrated gasification combined cycle (IGCC) technology and using NRG as an example of diminishing utility support for IGCC.

TXU's email highlighted several recent setbacks for utilities pursuing the technology, which has yet to be used at a full commercial scale power plant. NRG and AEP were used as examples of utilities that have backed away from their IGCC plans because of rising costs and state governmental roadblocks.

NRG Energy responded quickly to TXU's email by issuing a public statement from its president and CEO, David Crane, emphasizing the company's commitment to, and the viability of, IGCC technology as part of a balanced generation mix. Following is the full version of the statement:

"NRG's commitment to the deployment of IGCC is driven by several facts. First, global warming is one of the most significant challenges facing mankind. Second, the power sector is responsible for a significant part of the global emissions of greenhouse gases, and must play a leading role in reducing those emissions. Third, coal is -- and will remain -- the premier energy source for power generation purposes in the United States for the foreseeable future. This means it is incumbent on us to find ways to convert coal to electricity while dramatically reducing its carbon emissions."

"We have proposed IGCC projects in response to "clean fuel" Requests for Proposals issued by the States of New York and Delaware last fall. Our Huntley IGCC project in Tonawanda, New York received a conditional award in December--winning out over another bid which was based on traditional pulverized coal technology. We are now hard at work with the New York Power Authority to bring the project to fruition in a timely fashion. Our Indian River IGCC project in Delaware has been accepted for evaluation and remains under consideration. In both cases, we expect to win the projects and bring them to successful completion using state-of-the-art, carbon capture capable IGCC technology.

"With respect to the suggestion that we backed away from proposing IGCC technology in response to Connecticut's Request for Proposals, we indeed planned to offer IGCC initially but we ultimately did not do so for the simple reason that Connecticut asked for power in a time frame which could not be achieved by an IGCC plant, or for that matter, by a traditional coal plant of the type being proposed by TXU. We at NRG are proud of our focus on our customers and, as such, we seek to deliver what our customers request.

"We recognize that a public debate is now occurring in the State of Texas regarding what type of generation should be built in order to fuel Texas' robust growth and continued economic prosperity. We want to be part of that debate, and indeed we believe the blend of new nuclear, gas and coal-fueled plants which we have proposed in our 'Repowering Texas with NRG' program represents the best approach to affordable and reliable generation produced in an environmentally responsible manner.

"While we respect other viewpoints about the best path to economic and environmentally responsible power generation--both in terms of air emissions and water usage--we feel the need to set the record straight about NRG's viewpoint."

TXU has been under scrutiny from Texas politicians and businesses to consider IGCC technology instead of pulverized coal in its extensive expansion plans. TXU announced last year that it would build 11 new coal-fired units and has faced opposition from a growing number of sources worried about emissions from the plants.

TXU's email used quotes from an AP story regarding NRG's plans to cancel an IGCC plant in Connecticut because the plant could not be built in time to take advantage of state's incentive package.

The following is TXU's email supplied to Power Engineering by a TXU spokesman:

Reality Check: Proposed IGCC Power Plants Face Cancellation, Cost Recovery Opposition and Delay

AEP: Billion-Dollar Plant's Costs Are Escalating
"The company said earlier this year the plant would probably cost about $1 billion. It promised to provide a more detailed cost estimate by the end of this year. But in a letter hand- delivered on the day after Christmas to its regulator, the state Public Service Commission, the company's lawyers said it wouldn't be able to provide the estimate at this time.

"...What we've found out is, part of the higher cost is from the construction market -- concrete, steel, labor -- the regular things you have in construction," Matheney said. "It's also the first time a plant of this type has been built to commercial scale."

...The company has repeatedly said it will only build such plants in states where regulators allow it to recover its costs. That means ratepayers would have to pay increased rates."

...Morris [AEP Chairman and CEO Mike Morris] said the process of getting the regulatory and legal authority to build the integrated gasification plants "is taking longer than we'd like -- at least longer than I'd like. And arguably longer than our customers can really afford and longer than the instate regulators can afford."

NRG: Company Shelves Plan For "Clean Coal" Power Plant
"...NRG officials said they decided to drop the coal technology (IGCC) because the company couldn't build the planned 630-megawatt plant in time to receive state incentives....Environmental groups were already fighting the plant, saying the new coal technology still produces carbon dioxide, which, unless captured, contributes to global warming. The technology to capture the gas is still being developed."
- Associated Press, 11/28/06

AEP: CEO Says Issues Could Delay Clean Coal Build
"...The company had been hoping to build an integrated gasification combined cycle (IGCC) power plant in Ohio by 2010, "but it's probably more like 2011 or 2012," AEP CEO Michael Morris said....The process in Ohio has been slowed because of a lawsuit that alleges that the state public utility commission would overstep its authority by approving cost recovery for the coal plant. Morris said he expects a decision from the state's Supreme Court early in 2007...."
- Reuters, 11/06/06

The Bottom Line: IGCC is still a developing technology that is not yet available at the scale, efficiencies and availabilities needed to meet Texas' near-term power needs.

Cost Recovery Is Not an Option in Texas: Electric utilities developing IGCC plants in other states depend on limiting their technology and operational risk with regulatory cost recovery -- that's not an option in Texas.

IGCC Technology Not Guaranteed for Texas Fuels. No IGCC technology suppliers are currently providing guarantees for IGCC plants using the coals available in Texas.

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