AEP to Retire 6 GW of Coal Generation Amid EPA Regulation Concerns

American Electric Power (AEP) plans to retire nearly 6 GW of coal-fired capacity and upgrade or refuel another 11 GW as part of an estimated $8 billion plan to comply with a series of regulations proposed by the U.S. Environmental Protection Agency (EPA).

About 25 GW of AEP’s 38-GW capacity is coal-fired—making it the biggest coal-based utility in the nation. The announced closures will affect five coal plants and several aging units at other plants that were built between 1944 and 1961. AEP also said it would upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas-fueled generation.

The cost of the Ohio-based utility’s compliance plan could range from $6 billion to $8 billion in capital investment through 2020, AEP said. “High demand for labor and materials due to a constrained compliance time frame could drive actual costs higher than these estimates. The plan, including retirements, could change significantly depending on the final form of the EPA regulations and regulatory approvals from state commissions.”

AEP said it had already spent more than $7.2 billion in retirements and retrofits to its coal-fired fleet since 1990. “Annual emissions of nitrogen oxides from AEP plants are 80 percent lower today than in 1990. Sulfur dioxide emissions from AEP plants are 73 percent lower than in 1990.” Coal would fuel approximately 57% of AEP’s total generating capacity by the end of the decade, according to the plan.

“The cumulative impacts of the EPA’s current regulatory path have been vastly underestimated, particularly in Midwest states dependent on coal to fuel their economies,” said Michael G. Morris, AEP chairman and CEO. “We have worked for months to develop a compliance plan that will mitigate the impact of these rules for our customers and preserve jobs, but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25 percent of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and invest billions of dollars in capital to retire, retrofit and replace coal-fueled power plants.”

Morris added that the closures could result in a “sudden increase in electricity rates,” which would impact state economies “at a time when people and states are still struggling.” The closures would also result in a loss of about 600 power plant jobs (with annual wages totaling about $40 million) as a result of compliance with the proposed federal rules.

The potential impacts on the reliability of the transmission system—particularly in the Midwest—were also significant, Morris said. “The proposed timelines for compliance aren’t adequate for construction of significant retrofits or replacement generation, so many coal-fueled plants would be prematurely retired or idled in just a few years.

“With more time and flexibility, we will get to the same level of emission reductions, but it will cost our customers less and will prevent premature job losses, extend the construction job benefits, and ensure the ongoing reliability of the electric system,” he said.

The five plants slated for closure by Dec. 31, 2014, are: the 335-MW Glen Lyn Plant, Glen Lyn, Va.; the 630-MW Kammer Plant, Moundsville, W.Va.; the 400-MW Kanawha River Plant, Glasgow, W.Va.; the 1,050-MW Phillip Sporn Plant, New Haven, W.Va. (of which 450 MW will be retired this year and 600 MW retired in 2014); and the 100-MW Picway Plant, Lockbourne, Ohio.

AEP also expects to retire or convert the following units:

• Big Sandy Plant, Louisa, Ky. – Units 1 and 2 (1,078 MW) retired by Dec. 31, 2014; Big Sandy Unit 1 would be rebuilt as a 640-MW natural gas plant by Dec. 31, 2015;
• Clinch River Plant, Cleveland, Va. – Unit 3 (235 MW) retired by Dec. 31, 2014; Units 1 and 2 (470 MW total) would be refueled with natural gas with a capacity of 422 MW by Dec. 31, 2014;
• Conesville Plant, Conesville, Ohio – Unit 3 (165 MW) retired by Dec. 31, 2012; Units 5 and 6 (800 MW total) would continue operating with retrofits;
• Muskingum River Plant, Beverly, Ohio – Units 1-4 (840 MW) retired by Dec. 31, 2014; Muskingum River Unit 5 (600 MW) may be refueled with natural gas with a capacity of 510 MW by Dec. 31, 2014, depending on regulatory treatment in Ohio;
• Tanners Creek Plant, Lawrenceburg, Ind. – Units 1, 2 and 3 (495 MW) retired by Dec. 31, 2014; Unit 4 (500 MW) would continue to operate with retrofits; and
• Welsh Plant, Pittsburg, Texas – Unit 2 (528 MW) retired by Dec. 31, 2014; Units 1 and 3 (1,056 MW) would continue to operate with retrofits.
• The two coal-fueled generating units at Northeastern Plant (935 MW) in Oolagah, Okla., would be idled for a year or more while emission reduction equipment is installed. Both units would be idled beginning Jan. 1, 2016. One unit would return to service by Dec. 31, 2016. The other unit would return to service by Dec. 31, 2017.

Sources: POWERnews, AEP