IRP Frequently Asked Questions

About Our Future Power Plans

GRU is planning to meet your future power needs. The following answers common questions about proposed plans.

PLANNING AND CAPACITY

1. What has been proposed to meet Gainesville's long term electricity needs?
   GRU is considering several courses of action to decrease energy use and increase energy output. Based on staff and consultant research, community input and City Commission workshops, the likely best solution using criteria outlined by our customers will be a combination of increased conservation and building new generation, using both fossil and renewable fuels. The specific proposal includes: a) Meet an additional 10% of Gainesville's electrical energy requirements from renewable energy and conservation by 2012 over and above the 5% achieved to date;
   b) Institute the proposed Greenhouse Gas Fund to support local projects to reduce carbon dioxide, including a technical advisory committee reporting to the City Commission;
   c) Modify existing facilities at the Deerhaven Plant to minimize the emission of SO2, NOX, and Particulates, and to meet the Maximum Available Control Technology (MACT) standards of mercury. Due to new federal regulations passed in April 2005, GRU is proceeding with these modifications.
   d) Add air quality monitoring to better establish baseline ambient air quality conditions related to power generation.
   e) Add base load generation capacity designed to:
   i) Meet Best Available Control Technology (BACT) for regulated pollutants and MACT standards for mercury.
   ii) Utilize a mix of relatively abundant solid fuels including coal, petroleum coke, and the equivalent of at least 30 MW of biomass in order to meet the goal in recommendation a).
   iii) Produce electricity at a cost expected to be competitive in the retail and wholesale market.
   iv) Result in a net improvement of ambient air quality in combination with recommendation c).
   v) Maintain adequate and required capacity reserve margins.
   vi) Minimize the effects on surface and ground water supplies.
2. What is Integrated Resource Planning (IRP)?
   The IRP is a process used to help determine how best to meet future electrical needs. This process includes a review of a wide range of alternatives, including demand side reduction (conservation), renewable energy resources (waste wood, solar, wind, etc.) and conventional fuels. GRU has adopted IRP standards that are consistent with the 1992 National Energy Act (NEPA). NEPA standards minimize revenues and maximize environmental and reliability standards.
3. Why do we need another generating unit?
   Based on current forecasts, Gainesville will need additional electric generation by 2011 to meet customer and community needs. This forecast is based on population growth, increased per capita consumption, a rise in natural gas prices, and the aging of our current fleet of generating units. Increased per capita consumption is due to an increase in the use of electronics in our society, not waste, as Gainesville consumers are among the state's best in conserving energy.
4. What role does GRU play in the funding of city government?
   As a municipal utility, we are owned by the citizens of Gainesville and our board of directors is the Gainesville City Commission. Through a designated formula known as the General Fund Transfer (GFT), we contribute a portion of our revenues to fund vital city services such as police and fire protection. This year's GFT is roughly $27.2 million and represents over one third of the City's annual revenues.
5. What technology is GRU considering for generating electricity?
   The leading option is a 220 megawatt circulating fluidized bed generating unit that is capable of burning a variety of solid fuels such as coal, petroleum coke and waste wood. We are also recommending a retrofit of our Deerhaven Unit 2, which is more than 20 years old, with modern emissions control equipment to greatly improve its environmental performance. The new technologies are so superior to the technology of 20 years ago that the new unit and the retrofitted old unit combined would produce far fewer emissions than the old unit alone prior to retrofitting. And the economies of scale in building these two projects at the same time will result in considerable savings for our customers.
6. How has GRU factored future technology improvements into its long term plan for meeting customer needs?
   We stay abreast of improvements and trends in our industry through participation in organizations such as the American Public Power Association. We also study technological innovations promoted by the U.S. EPA and the U.S. Department of Energy. We also take advantage of the local University community, and independent consulting firms with national credentials, such as R.W. Beck. GRU's staff is charged with making certain that all advances in science and technology are factored into every decision we make for the benefit of our customers and community. Improvements in technology allow us to provide electric service more economically, efficiently and reliably, with better environmental performance than ever before.
7. What fuels are being considered and why?
   Coal, petroleum coke (pet coke) and waste wood. Coal has a domestic reserve of nearly 500 years, far greater than any other practical source of fuel. It is the lowest cost fuel available in large supply, has very reliable delivery options, and with modern technologies can be nearly as clean as the far more expensive natural gas. Petroleum coke has the advantage of producing a greater amount of heat than coal for the same quantity burned, is cheaper than coal, and available quantities are expected to increase. Using the same modern emissions control technologies, pet coke can achieve the same environmental performance as coal. Waste wood is considered environmentally positive because it is usually burned outdoors for disposal purposes, and so by burning it using modern technologies emissions would be drastically reduced. It is readily available as a local resource.
8. What is Petroleum (Pet Coke)?
   Petroleum (pet) coke is a fuel produced using the byproducts of the petroleum refining process. A residue left over from this process can be further refined by "coking" it at high temperatures and under great pressure. The resulting product is pet coke, a hard substance that is similar to coal, and that is growing in popularity as a fuel for generating electricity. Pet coke has a higher heating value than coal, meaning less has to be burned to create equal heat. It does not have to be mined or produced as a separate product, making it one of the least inexpensive fuels available, even less expensive than coal.
9. What permits and approvals would GRU need to obtain before building a new generating unit?
   GRU would have to obtain a Site Certification from the Governor and Cabinet using procedures established in Florida's Electrical Power Plant Siting Act. This is a lengthy process that would require us to obtain a determination of need for additional generating capacity that is in the public's best interest from the Florida Public Service Commission and demonstrate that the project would meet all of the local, state and federal regulatory requirements applicable to the project. The regulatory agencies and the public would review GRU's application and participate in hearings before an administrative law judge who would make a recommendation to the Governor and Cabinet, who make the final decision. The Florida Department of Environmental Protection serves as staff to the Governor and Cabinet and coordinates the review process. This process takes a number of years, and is one reason we must start soon in order meet our community's needs by 2011.
10. Why is Deerhaven the preferred site for a new generating unit?
    The Deerhaven Generation Station is located on over 3,400 acres of land belonging to GRU. Only 1,000 acres is currently utilized, leaving plenty of land to build a new unit and still provide adequate natural buffers for the benefit of neighbors and wildlife. Also, Deerhaven is already set up to service a solid fuel unit, with an operating rail system for coal delivery and other coal handling and storage facilities. With this infrastructure in place, it would make it even more cost effective to build a second solid fuel unit at Deerhaven.
11. Why is GRU making changes to Deerhaven Unit 2?
    Deerhaven Unit 2 is a coal burning unit, is our largest generating unit, and is over 20 years old. While it is still a very dependable source of generation that helps us keep electricity affordable, modern air emissions control equipment can significantly reduce emissions. As a result of new federal legislation passed in April, 2005, GRU will proceed with the retrofitting of Deerhaven 2 to meet new standards. The cost of the mandated retrofit is estimated at approximately $90 million.
12. What is proposed for the retrofit of Deerhaven 2?
    The retrofit of GRU's existing coal-fired Deerhaven Unit 2 would involve the installation of additional air emissions controls for nitrogen oxide, sulfur dioxide and particulate matter, which would result in significant reductions in regulated air emissions.
13. How would a new generating unit affect electric rates for GRU customers?
    The bottom line is that our rates will remain at competitive levels with other electric utilities in north central Florida. Although base rates will go up to pay for the new unit, the fuel costs will go down since coal and pet coke are much cheaper than natural gas.
14. What will the new unit cost, and will rates go up eventually?
    If GRU implements the proposed solid fuel unit, the cost will be approximately $450 million based on current forecasts. This includes an environmental evaluation, need determination with the Florida Public Service Commission, permitting, site certification and infrastructure. Regardless of which solution is implemented, rates will likely increase in the future. However, they would go up less with our proposed plan. To offer a comparison- by 2023, the solid fuel plan would have increased an average monthly residential bill of 1,000 kilowatt hours to $114, compared with $193 if we purchased power on the market.
15. Isn't building a new plant just going to encourage unwanted growth?
    No, our planning is based on growth projections that are consistent with those used by the City and County. Just as they must plan for normal growth in the infrastructure needs of the community, so must the utilities.
16. I understand that GRU sells electricity from time to time. If that's the case, why do they need more generation?
    Utilities are able to trade electricity on the open market on an almost instantaneous basis- this is a normal part of the operation of an electric utility. When there is more power available than needed, it is sold at a profit to help keep costs down for customers. And when additional power is required, it can sometimes be purchased at a lower price than it would cost to fire up another generating unit. This is simply an efficient and economical use of resources. If we did not trade on the open market our customers would have to pay substantially higher prices.
17. Would we need new generation if we stopped selling power to other communities?
    GRU currently has multi-year contracts with the City of Alachua and Clay Electric Cooperative to provide power. Our analysis shows that if we stopped serving these neighbors, we would still need future generation. We serve these neighbors efficiently, and plan to continue serving them in the future. If we did not serve them, they would buy power from other area utilities, which would generate at plants somewhat farther away to provide them with power. That would result in an actual increase in generation, to make up for the line loss incurred during energy transportation, and our local customers would not receive the economic benefits from these sales.
18. Why can't we just build a smaller plant now, and add on as we need more power in the future?
    New generating units come in specific sizes. It is economically wise to buy a unit that serves long-term needs and "grow into it." In the early years, the excess power can be sold to help keep rates down for local customers. However, each year more and more of the power will be used locally. Building only to suit present needs would be extremely costly to our customers, as it would put us in a constant state of construction to keep up with the ever-changing "present" needs.
19. Has a nuclear plant been considered?
    At this time, no new nuclear plants are being permitted in the United States, and existing nuclear power is not available on the open market. GRU owns a small percentage of Crystal River's nuclear unit, and that power is used around the clock as our least expensive base load component.
20. A couple of years ago GRU "repowered" the J.R. Kelly Generating Station with a natural gas burning combined-cycle generating unit (CC1). Natural gas is supposed to be clean, cost-effective and efficient. Why wouldn't GRU use this same technology now?
    Combined Cycle 1 (CC1) at Kelly is an intermediate unit. That means it is efficient to use for certain extended periods of time, but due to the price of natural gas, it is too expensive to operate all of the time as a base load unit. The electric energy need our community is facing in 2011 is for base load.
21. Can we avoid building by purchasing power from other companies?
    Yes, but based on market prices and availability, it would be a very expensive option. Due to the high number of natural gas units built in recent years, a trend that helped drive up the price of natural gas, the only electric capacity that will be available on the open market in the future will be very high-priced natural gas. In that we need base load generation, which runs around the clock, burning natural gas would result in very high costs for our customers. We would also need to rely more on the electric transmission system and would have less control over our electricity supply.
    CONSERVATION AND THE ENVIRONMENT
22. Can we meet the need for increased electricity with increased conservation?
    No. Additional generation is needed by 2011, primarily due to growth in our customer base, as well as the retirement of aging generators, not due to increased electricity waste by existing customers. The shortfall of electric capacity we have identified is far too great to be addressed by conservation alone. Also, since Gainesville already has one of the lowest rates of electricity use in the country, the opportunity to further conserve is limited. Nevertheless, conserving energy is important. In response to community input, we are implementing seven new programs in cost-effective stages that are designed to increase conservation.
23. How are GRU customers doing in conserving energy?
    GRU's customers have the lowest per capita electricity usage in the state, and have had for a number of years. This is one reason why additional conservation is hard to achieve, as our customers are already doing more than most.
24. What is GRU doing to encourage conservation?
    Conservation is a vital component of our long range plan. GRU has long encouraged conservation through rebate programs, free energy and water conservation surveys, through information available on our Web site, through our customer newsletter, and through our business and residential customer representatives. Among other efforts, we are currently implementing a middle school curriculum on conservation and renewable energy programs. Additionally, we have implemented six new conservation programs and are reviewing additional programs
25. What is Gainesville's air quality at the present time?
    Air quality in Alachua County is recognized as being "good." Alachua County's air meets the Ambient Air Quality Standards, and has been designated by the U.S. Environmental Protection Agency, along with all of Florida, as being "in attainment." Florida is one of only three states in the country to meet that standard.
26. What is GRU doing to ensure that Gainesville's air quality remains the same or improves?
    Our power plants have a relatively small impact on ambient air quality, predicted by air quality modeling data and confirmed by ambient air monitoring data that is compared with Ambient Air Quality Standards (AAQS). Air quality is influenced by many factors, including emissions from local, regional and global sources, as well as chemical reactions in the atmosphere and earth, and weather conditions. GRU, on the other hand, can only control one factor: emissions from our power plants. We do that three ways, by:
    * Using the best operating practices in our power plants
    * Properly maintaining and operating our emissions control equipment
    * Burning fuels that are low in sulfur
    Our proposed project will reduce current emissions from Deerhaven 2 even further with retrofitted modern emissions controls, which will likely include a scrubber for sulfur dioxide (SO2) and particulate matter, a fabric filter for particulate matter and selective catalytic reduction for nitrogen oxides (NOx).
27. If a new generating unit is built, what emission controls would it have?
    The new electric generating unit will employ the Best Available Control Technology (BACT) at the time it is permitted. The specific equipment we will use will depend upon the type of unit we eventually build, and the BACT standards at that point in time. If we build the currently envisioned Circulating Fluidized Bed (CFB), it would likely be equipped with limestone injection and a scrubber for SO2 and particulate matter (PM), a fabric filter for PM, and selective non-catalytic reduction for NOx, if needed. Activated carbon injection may also be used for mercury reduction.
28. How would emissions from the new unit affect human health?
    Ambient Air Quality Standards (AAQS) have been established by the U.S. Environmental Protection Agency to protect human health and welfare with an adequate margin of safety. Preliminary air modeling indicates that the impacts from GRU's current operations, and our proposed project, are and would continue to be, minimal and well within the AAQS.
29. How is GRU addressing the problem of global warming?
    Global warming is a well documented issue raising legitimate concerns about the effects of energy consumption in the creation of greenhouse gases (GHG). The simplest and best way to reduce GHG is by using energy as efficiently as possible. GRU has implemented a number of conservation programs to help our customers reduce energy use. In addition, we are already using and plan to increase our use of renewable resources such as landfill gas, solar and biomass from waste wood. We are continuously improving the efficiency of electric generation and all supporting operations, and promoting the efficient use of electricity in the community. There is much debate about GHG and how much they affect the world's climate, but there is agreement that carbon dioxide (CO2) is released in greater quantities than any other GHG, and the majority of it comes from motorized vehicles. GRU has implemented and is recommending additional projects to reduce carbon intensity, that is, the amount of carbon emitted per unit of electricity produced. These include our renewable energy projects, including burning waste wood in the proposed new unit.
30. If coal is used as a fuel, how will mercury emissions be controlled?
    The modern emissions controls proposed for the new generating unit as well as the retrofitting of Deerhaven Unit 2 will help reduce mercury emissions. Also, the mercury content of petroleum coke, one of the fuels proposed for the new unit, is lower than coal. Mercury occurs naturally in the environment, and U.S. power plants produce less than one percent of the world's mercury emissions.
31. What does clean coal mean exactly?
    According to the Coal Utilization Research Council, "Clean Coal Technology" (CCT) describes modern processes that increase the energy efficiency and reduce the environmental effects of coal use compared with older coal-based systems. CCTs can include pollution controls for new and existing plants, advanced combustion technologies and coal gasification-based systems.
32. How will renewable sources of energy be used to meet our community's electricity needs?
    Wind, geothermal and hydropower are not available in Florida, and even our tides are too gentle to provide tidal power. Surprisingly, in the "Sunshine State," a high degree of cloudiness also reduces the usefulness of solar technology, which is better suited for a desert environment. That limits us to biomass and intermittent solar, and we are pursuing both of those options with vigor. Our GRUgreenTM Energy project already uses methane gas from the southwest landfill and solar energy to generate electricity locally. Wind power, produced elsewhere, is purchased for resale to our customers through the GRUgreenTM program. Biomass, especially from waste wood, is the best option for our area, which is rich in waste materials from forestry and land clearing operations. We have proposed generating up to 30 megawatts of electricity from waste wood in our new generating project. Waste wood from timber operations is typically burned in the open, which produces uncontrolled particulate emissions. Our use of this product would apply modern emissions control technology, thus improving the air quality in our region. It would also displace the use of fossil fuels in our power plants. This project could position GRU as a leader in the use of renewable energy in Florida as well as the rest of the country.
33. Why can't we get all of our new generation from renewable sources like wood waste, solar, wind and tidal?
    Wood waste is the only plentiful supply of renewable energy in our area, and we have determined that there is enough to supply at least 30 megawatts of sustainable power for our generation plan. However, that is nowhere near enough to meet our community's future demand. Our GRUgreenTM Energy program currently uses landfill gas, solar, and purchased wind energy for sale to those few customers who are willing to pay the premium for this somewhat more expensive energy. By adding wood waste to the mix of fuels for our new unit, we will be renewable leaders not only in Florida, but in the nation.