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The time is right to retire C.D. McIntosh Unit 3

October 01, 2015
David Schlissel and Cathy Kunkel
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Key Findings

The cost of generating power at McIntosh Unit 3 increased by approximately 33% in recent years, from just under $52 per MWh in 2009 to an average of over $69 per MWh in the three most recent Fiscal Years (2012, 2013 and 2014).

Forecast of future resources and loads published by the Florida Reliability Coordinating Council (FRCC) in 2014 show that the retirement of McIntosh Unit 3 at any time in the near future would not reduce regional electric grid reliability.

Executive Summary

Lakeland Electric and the Orlando Utilities Commission should retire the C.D. McIntosh Unit 3 coal-fired power plant in the near future. Retirement of the plant would benefit the utilities, their customers and the environment.

C.D. McIntosh Unit 3 is a 33-year-old 364 megawatt plant located in the City of Lakeland, Fla. It shares the site with several other generating units, including a newer natural gasfired combined cycle plant. The plant is 60% owned by the City of Lakeland, (Lakeland Electric) and 40% by the Orlando Utilities Commission.

Since 2009, Unit 3 has become increasingly expensive to operate as its average cost of producing power increased by 33% from 2009 to 2013. In addition, Unit 3’s joint owners, Lakeland Electric and the Orlando Utilities Commission, have made more than $70 million in capital investments in the years 2009-2014 to replace or upgrade plant equipment and components. Further capital expenditures can be expected in future years as the unit ages and if it remains online.

The amount of electricity generated by Unit 3 has declined precipitously since 2008, largely as a result of the plant’s unreliable operations and competition from less expensive power from existing plants in Florida. Unit 3 is unlikely to regain any of this lost generation because the state has a significant amount of low-cost excess natural gas-fired generation and as the price of installing new solar resources continues to decline.

The retirement of McIntosh Unit 3 at any time in the near future would not reduce regional electric grid reliability. Even without Unit 3, there would be more than enough generating capacity in the state to serve projected system loads while providing the 15% capacity reserve margin that is needed to allow for unexpected power plant outages and unanticipated high system loads.

A reasonable resource strategy for both Lakeland Electric and the Orlando Utilities Commission would be to retire McIntosh Unit 3 and, in the short term, purchase any needed replacement power from excess capacity at existing natural gas-fired combined cycle plants, while aggressively promoting investments in energy conservation and solar photovoltaic resources. This strategy would enable Lakeland Electric and the Orlando Utilities Commission to retire McIntosh Unit 3 without increasing their long-term dependence on natural gas. Development of solar photovoltaic energy in Florida, the U.S. state with the third–highest potential for solar energy, will reap long-term benefits for the municipal utilities and their ratepayers. Energy efficiency also is a very low-cost alternative to continued operation of McIntosh Unit 3 that will reap benefits for the utilities and their ratepayers.

Please view full report PDF for references and sources.

Press release: Study Concludes Costly Coal Plant In Lakeland, Fla., Should Be Retired In Favor Of Solar Expansion And Energy-Efficiency Initiatives

David Schlissel

David Schlissel is an IEEFA analyst with 50 years of experience as an economic and technical consultant on energy and environmental issues. 

He has testified as an expert witness before regulatory commissions in more than 35 states and before the U.S. Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.

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Cathy Kunkel

Cathy Kunkel is an Energy Consultant at IEEFA.

Cathy also served as an IEEFA Energy Finance Analyst for 7 years, researching Appalachian natural gas pipelines and drilling; electric utility mergers, rates and resource planning; energy efficiency; and Puerto Rico’s electrical system. She has degrees in physics from Princeton and Cambridge.

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