FINAL ENVIRONMENTAL IMPACT STATEMENT (VOLUME I – MAIN REPORT) Highwood Generating Station Southern Montana Electric Generation & Transmission Cooperative, Inc. United States Department of Agriculture – Rural Utilities Service Montana Department of Environmental Quality January 2007 FINAL ENVIRONMENTAL IMPACT STATEMENT (FEIS) HIGHWOOD GENERATING STATION Great Falls, Montana USDA Rural Utilities Service Montana Department of Environmental Quality Washington, D.C. Helena, Montana January 2007 Abstract Southern Montana Electric Generation and Transmission Cooperative, Inc. (SME) proposes to build a 250-megawatt (MW) coal-fired power plant – the Highwood Generating Station (HGS) – and 6 MW of wind generation at a site near Great Falls, Montana. SME has applied for a loan guarantee to construct the HGS from the Rural Development Utilities Program (RD) of the U.S. Department of Agriculture (USDA). SME has also applied for an air quality permit and other environmental permits and licenses from the Montana Department of Environmental Quality (DEQ). In order to fulfill their respective obligations under the National Environmental Policy Act (NEPA) and the Montana Environmental Policy Act (MEPA), RD and DEQ have jointly prepared an Environmental Impact Statement (EIS). The Proposed Action includes the construction and operation of a 250-MW (net), circulating fluidized bed (CFB), coal-fired generating plant and four 1.5-MW wind turbines. The EIS analyzes the potential environmental effects of SME’s Proposed Action and alternatives to that action. The draft EIS was released in June 2006 and public hearings were held at two locations in July and August; the comment period on the draft EIS closed on August 30, 2006. In response to public and agency comments, a number of changes were made to the EIS text itself – including new alternatives and revised significance findings – and the location of the preferred alternative was shifted to reduce cultural and visual impacts on the Great Falls Portage National Historic Landmark. More than 20 alternatives are evaluated in Chapter Two of the FEIS but eliminated from more detailed consideration because they fail to meet the purpose and need of the Proposed Action – providing 250 MW of base load generation – on the grounds of cost, reliability, or other technical or environmental shortcomings. Alternatives eliminated include: power purchase agreements; energy conservation and efficiency; renewable non-combustible energy sources (wind energy, solar energy, hydroelectricity, geothermal energy); renewable combustible energy sources (biomass, biogas, municipal solid waste); non-renewable combustible energy sources (natural gas combined cycle, microturbines, pulverized coal, integrated gasification combined cycle coal, oil); nuclear power; two alternatives consisting of combinations of renewable resources; and three alternative sites. Several alternative site-specific components also eliminated include: different railroad spur alignments, alternate methods of obtaining potable water, discharging wastewater into the Missouri River, and disposing ash at local landfills. In the FEIS, USDA and DEQ have selected the Proposed Action as their preferred alternative. Alternatives assessed in detail include the: 1) No Action Alternative; 2) Proposed Action (construction/operation of the HGS and wind turbines at the Salem site eight miles from Great Falls), and 3) Industrial Park Site (construction/ operation of the power plant, but no wind generation, at an alternate site in a designated industrial park just north of Great Falls). The No Action Alternative avoids most direct adverse environmental effects, but potentially entails a number of indirect and cumulative impacts associated with other generation sources from which SME would have to purchase power if unable to generate its own. In most respects, with the exception of cultural resources, impacts from the Proposed Action (2) and Alternative Site (3) are similar, though the proximity of the Alternative Site to greater numbers of residents intensifies some of these impacts, such as traffic, noise, and air quality; nonetheless, impacts would not likely be significant. Potential air quality impacts at both locations would be reduced to non-significant levels through the application of CFB technology and other pollution controls. SME’s plant would be subject to Montana air quality permit limits as well as any Montana mercury rule that may be adopted, and EPA’s new federal mercury rule. The main potentially significant adverse impacts would be on cultural and visual resources, because constructing the HGS at the Salem site would adversely affect the Great Falls Portage National Historic Landmark (NHL) commemorating the 1805 portage the Lewis and Clark Expedition made around the Great Falls of the Missouri River. Repositioning the HGS and wind turbines reduces but does not eliminate significant impacts on the NHL. Other impacts rated as significant in the final, but not the draft EIS, are temporary impacts on traffic and Level of Service, and long-term impacts to the acoustical environment of the NHL. To comment on this final EIS, please contact: Richard Fristik [email protected] USDA Rural Development, Utilities Programs 1400 Independence Ave, SW, Mail Stop 1571, Room 2237 Washington, DC 22050-1571 Comments must be received by March 12, 2007. Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station EXECUTIVE SUMMARY Introduction The Southern Montana Electric Generation and Transmission Cooperative, Inc. (SME) proposes to build a 250-megawatt (MW), Circulating Fluidized Bed (CFB), coal-fired power plant – called the Highwood Generating Station (HGS) – and 6 MW of wind generation at a site near Great Falls, MT. This final Environmental Impact Statement (FEIS) discusses this Proposed Action and analyzes its potential effects on the environment. SME is based in Billings, Montana. As an electric generation and transmission cooperative, it is a non-profit utility owned by its members. As such, it provides wholesale electricity and related services to five electric distribution cooperatives and one municipal utility. The SME member systems are: • Beartooth Electric Cooperative, Inc., headquartered in Red Lodge, Montana. • Fergus Electric Cooperative, Inc., headquartered in Lewiston, Montana. • Mid-Yellowstone Electric Cooperative, Inc., headquartered in Hysham, Montana. • Tongue River Electric Cooperative, Inc., headquartered in Ashland, Montana. • Yellowstone Valley Electric Cooperative, Inc., with headquarters at Huntley, Montana. • Electric City Power, Great Falls, Montana. SME’s 58,000-square mile (150,220-square kilometer) service area encompasses 22 counties in two states – Montana and a very small area of Wyoming. Under its charter, SME is required to meet the electric power needs of the cooperative member systems it serves. SME does not have the capacity to meet all of its members’ power needs beyond roughly 2010. After considering various ways to meet those future needs, SME identified the construction of a new coal-fired power plant near Great Falls – the proposed Highwood Generating Station (HGS) – supplemented with four wind turbines on the same site, as its best course of action to meet the electric energy and related service needs of approximately 120,000 Montanans. SME has applied for a loan guarantee to construct the HGS from the Rural Utilities Service (RUS), an agency which administers the U. S. Department of Agriculture's Rural Development Utilities Programs (USDA Rural Development). The RUS application covers the financing needs of the five cooperative members of SME, representing approximately 75 percent or 185 MW of the total projected load needs of SME. The remaining 25 percent or approximately 65 MW of projected load is planned to be financed separately by Electric City Power. SME has also applied for an air quality permit and other environmental permits and licenses from the Montana Department of Environmental Quality (DEQ). In order to fulfill their respective obligations under the National Environmental Policy Act (NEPA) and the Montana Environmental Policy Act (MEPA), RUS and DEQ have jointly prepared this Environmental Impact Statement (EIS). The Proposed Action includes the construction and operation of a 250- MW (net), CFB coal-fired generating plant and four 1.5-MW wind turbines. The FEIS analyzes the potential environmental effects of the Proposed Action and alternatives to that action. Executive Summary ES-1 Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station RUS has established procedures for determining if a proposed project for which a loan or loan guarantee is sought is feasible both from an engineering and financial perspective. Following RUS procedures, SME prepared several proposal development documents, including a System Load Forecast, Alternative Evaluation Study and a Site Selection Study. These studies were subject to RUS’s review and approval. Their information and analyses are incorporated into this EIS; they are also available to the public on RUS’s website at: http://www.usda.gov/rus/water/ees/eis.htm . The draft EIS (DEIS) on the HGS was released in June 2006 and public hearings were held in Great Falls and Havre, in July and August respectively. Upon request by an interested party, the comment period on the DEIS was extended by two weeks; it closed on August 30, 2006. Subsequently, in response to public and agency comments and concerns, a number of changes were made to the DEIS text itself – including new alternatives and revised significance findings – and the location of the preferred alternative was shifted to reduce cultural and visual impacts on the Great Falls Portage National Historic Landmark (NHL). The FEIS reflects those changes, which are shown in double-underlining. Also included in the appendices of the FEIS are the comments and agencies’ responses to comments, a draft Memorandum of Agreement (MOA) on the NHL, and the final draft Biological Assessment (BA) prepared in compliance with Sec. 7(c) of the Endangered Species Act. Purpose, Need for, and Benefit of the Proposed Action Presently, SME meets all of the power requirements for its cooperative member systems by purchasing power from two Federal power suppliers – the Bonneville Power Administration (BPA) and the Western Area Power Administration (WAPA). However, its major supplier (BPA) will end its sales of power to SME by 2011. Thus, SME will need to close the large projected gap between the amount of power it can provide to its cooperative member systems and the amount of power those cooperative member systems need to supply their residential, commercial and industrial customers. Currently, approximately 20 percent or 20 MW of the cooperative member systems’ wholesale supply requirements are met through a power purchase agreement with WAPA. The remaining 80 percent or about 100 MW is met by purchase from BPA under an “all supplemental requirements” contract effective from 2000-2017. The wholesale power requirements of Electric City Power are met with purchases from PPL Montana that will expire in 2011. A provision of SME’s power purchase agreement with BPA allows “recall” of a portion of SME’s purchase rights beginning in 2008, and the remaining power purchase rights of the contract by 2011. BPA has now exercised this provision because it has determined that the load requirements of the region which it has a statutory requirement to serve will have needs in excess of its current generating capacity. Under the laws governing BPA, SME is an “extra-regional” customer because it is located east of the continental divide. SME thus faces an imminent wholesale power supply shortfall of major proportions. Based on SME’s existing and projected capacity and energy requirements, in 2009 it will have a resource requirement or deficit of approximately 116 MW. By 2012 this deficit will grow to approximately 160 MW as the BPA power purchase agreement is phased out. Given the price Executive Summary ES-2 Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station volatility of natural gas and the lack of viable wholesale power purchase options, SME needs to seriously consider developing an alternate wholesale power supply resource. In addition, Electric City Power has projected resource requirements of approximately 65 MW. In demonstrating to RUS how to best meet its power supply obligations in the face of a looming phase-out of its main existing power source, SME concluded that owning its own source of electric generation would be in the best interest of its cooperative member systems. SME proposes to construct a 250 MW, CFB coal-fired power plant near Great Falls, Montana. The Proposed Action would also include four 1.5 MW wind turbines, construction of approximately 14 miles (23 km) of transmission lines, substation facilities, pipelines for raw water, potable water and wastewater, and about six miles of railroad tracks for delivery of coal to the plant, in addition to other components. In addition to providing a reliable supply of electricity at an affordable price, the Proposed Action would furnish local employment in the Great Falls area during construction and operation. It would also provide tax benefits for Cascade County and the City of Great Falls, as well as other associated socioeconomic benefits. Alternatives Eliminated from Detailed Consideration The Alternative Evaluation Study and FEIS examined a total of 29 alternative means of responding to the identified purpose and need for the project. These alternatives were evaluated in terms of cost-effectiveness, technical feasibility, and environmental soundness. Twenty-six alternatives were considered but dismissed from more detailed analysis on one or more grounds: (cid:131) Power Purchase Agreements – Eliminated because of higher cost and no probable environmental advantage; SME would contribute indirectly to impacts from other generation sources. (cid:131) Renewable Non-Combustible Energy Sources – Wind Energy – Incapable of providing approximately 250 MW of base load due to its intermittency. Solar Energy (photovoltaic and thermal) – Much higher overall cost and inability to serve as base load due to intermittency. Hydroelectricity – Scarcity of remaining undeveloped hydro resources in Montana and generally unacceptable environmental impacts. Geothermal Energy – Unavailability of sufficient geothermal resources to generate electricity on a commercial scale in Montana. (cid:131) Renewable Combustible Energy Sources – Biomass – Infeasible due to distance to and uncertainties associated with wood waste supply. Biogas – Infeasible due to dispersed locations and insufficient quantities of fuel sources in Montana such as digester gas from organic material and landfill gas. Municipal Solid Waste – Unavailability of municipal solid waste in Montana in sufficient quantities to generate 250 MW plus generally high emissions and other environmental problems such as toxic ash and residues. Executive Summary ES-3 Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station (cid:131) Non-Renewable Combustible Energy Sources – Natural Gas Combined Cycle – Price volatility and likelihood of significantly higher future costs as a result of rising demand and limited supplies. Microturbines – Infeasible due to dispersed locations and insufficient quantities of fuel sources in Montana such as digester gas from organic material and landfill gas. Pulverized Coal – Somewhat higher emissions of air pollutants and somewhat higher capital cost than CFB. Integrated Gasification Combined Cycle – Not currently cost-effective and requires further research to achieve an acceptable level of reliability; except for still undemonstrated potential to sequester carbon dioxide, does not enjoy significant emissions advantages over CFB. Oil – High prices and price volatility, with prospect for even higher prices and volatility in the foreseeable future. (cid:131) Nuclear Power – Permitting and construction of nuclear power plants takes considerably longer than for PC or CFB plants and a new plant would face stiff public opposition; moreover, nuclear power is not cost-effective at the scale needed by SME. (cid:131) Combinations of Energy Sources – Smaller CFB Plant and Renewable Energy Sources – This combination alternative only partially meets the purpose and need of this project in the short- term. It would not provide reliable, cost effective, and consistent energy generation for the predicted long-term load; in addition, transmission constraints and impacts were a key factor in this alternative not being viable. Combination of Renewable Energy Sources – This combination alternative would not meet the purpose and need of this project. It would not provide long-term term reliable, cost effective, and consistent energy generation for the predicted load; in addition, transmission constraints and impacts were a key factor in this alternative not being viable. (cid:131) Other Coal-Fired Power Plant Sites – Decker – More expensive than Great Falls sites; also has a higher degree of risk associated with environmental permitting and approvals; subject to water disruption and the lack of available water rights. Hysham – More expensive than either of the Great Falls sites; also has a higher degree of risk associated with environmental permitting and approvals and available water supply and water rights. Nelson Creek – More expensive than either of the Great Falls sites; also has a higher degree of risk associated with environmental permitting and approvals and available water supply and water rights. (cid:131) Salem Site-Specific Alternative Components – Obtaining Potable Water From Other Sources – - Importing bottled water – Bottled water would not be cost effective in large quantities for site-wide use for anything other than drinking water. Executive Summary ES-4 Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station - Drinking water wells drilled onsite – Rejected in part because of the 300- 450-foot depth to the water-bearing Madison limestone formation. - Additional river diversion – The water treatment facility would be classified as a public water supply and would be subject to state and county regulations; no environmental advantage over connection to and use of City of Great Falls water system. Directly Discharging Wastewater into the Missouri River – Rejected in favor of discharging into the City of Great Falls’ wastewater treatment system on the grounds of environmental benefits and the cost to construct, operate, maintain, and monitor the facility. Disposing of Sanitary Wastewater in Septic System – Offers no environmental benefits over SME’s proposed connection and use of the City of Great Falls wastewater treatment Alternate Railroad Spur Alignments – - Routed south of power plant to abandoned railroad grade – Rejected because of disadvantages including need for replacing sections of existing, abandoned railroad grade, conversion of privately owned croplands, and routing of coal train traffic through City of Great Falls. - Routed north of power plant to City of Great Falls along property lines – Rejected because of difficult and expensive installation due to rougher terrain, greater environmental impacts at crossings of coulees and watercourses, and the highest estimated cost from the bridges or trestles that would be needed. Hauling Ash to High Plains Landfill – Rejected because of greater cost and the need to haul 10-12 trucks per day carrying ash through City of Great Falls. Alternatives Assessed in Detail No Action Alternative Under the No Action Alternative, the HGS would not be constructed or operated to meet the projected 250-MW base load needs of SME. There would be no facilities constructed at either the Salem or Industrial Park sites to meet the purpose and need. However, it is unreasonable to assume that no alternative source of electricity would be provided for SME customers once the current power purchase agreement with the Bonneville Power Administration begins to expire. Therefore, the primary assumption for the No Action Alternative is that the need for a reliable energy supply for the SME service area would still be met by some means, mostly likely the purchase of power from other sources of generation in the West, including those already online and those currently being developed. While no specific generation sources have been identified, it is assumed that power would likely be provided by some mixture of coal, natural gas, oil, hydro, nuclear fission, and renewable electricity sources. Proposed Action: Highwood Generating Station – Salem Site Under this alternative, the HGS would be built and operated approximately eight miles east of Great Falls. The Salem site is located in Sections 24 and 25, Township 21 North, Range 5 East Executive Summary ES-5 Rural Utilities Service/Montana DEQ Southern Montana Electric G & T Final Environmental Impact Statement Coal-fired Highwood Generating Station at about 3,300 feet (1,006 m) above sea level. It is east and north of the intersection of Salem Road and an abandoned railroad bed. In addition, four 1.5-MW wind turbines would be constructed and operated on the same site. In response to public concern about visual and cultural resources impacts on the NHL, SME has moved the locations of the footprints of the HGS itself and the four wind turbines. The footprint of the power plant has shifted about one-half mile south to a location just outside the eastern NHL boundary. However, due to property constraints and the necessity of keeping the wind turbines upwind of the power plant, it was not possible to move the wind turbines outside the NHL; they have been relocated toward the north, and still remain within the NHL. Construction is estimated to take approximately four years and three months (51 months) from ground breaking to commercial operation of the plant. Construction would begin with site preparation, foundations, and underground utilities, while design of the above-ground mechanical, piping, buildings, structures, and electrical systems is being developed. Site grading and preparation has a planned duration of approximately two months and would be followed by foundation construction, with a planned duration of approximately a year. Using a phased process, boiler and baghouse construction would commence approximately five months after the beginning of the foundation construction and would be completed in approximately two years. Construction of the four 1.5-MW wind turbines would take place concurrently with power plant construction. The towers are anticipated to have a height of 262 feet (80 m) at the rotor. The wind turbine is expected to have three blades, with an overall diameter of 250-270 feet (77-82.5 m) or radius of 125-135 feet (38-41 m). In addition to construction of the HGS and wind turbines on the Salem site itself, construction of the following utility facilities and infrastructure would take place in the vicinity: a rail spur, raw water intake at the Morony Reservoir on the Missouri River, raw water pipeline, two 230 kV transmission lines, a new switchyard, potable and wastewater lines, and access roads. Once construction was completed, plant start-up activities would be initiated with a planned duration of eight months and must be completed before commercial operation of the plant could begin. Plant operation would employ approximately 65 permanent workers. The plant design consists of a CFB boiler, single re-heat tandem compound steam turbine, seven stages of feedwater heating, water-cooled condenser, wet cooling tower, hydrated ash reinjection or equivalent flue gas desulfurization (FGD) system, baghouse, and material handling system. The plant would withdraw and use for cooling approximately 3,200 gallons per minute of water from the Missouri River. The HGS would purchase sub-bituminous coal from either the Spring Creek or Decker mines in Montana’s Powder River Basin (PRB), or other suitable supply from which comparable PRB coal supplies are produced. Coal consumption is estimated to be 300,000 lb/hr or 1,314,000 tons/yr. Coal would be delivered approximately twice a week in 110-car bottom-dump unit trains. Fly ash from the coal combustion process would be disposed of onsite in an engineered monofill, lined with clay. Executive Summary ES-6