Do Old Coal Plants Ever Die?

By Kennedy Maize

Washington, D.C., February 13, 2012 — Environmental activists have a long record of miscalculation and misadventure. That’s been particularly true when it comes to coal. Remember acid rain? No such thing, according to a decade-long government scientific inquiry (which can’t ever quite turn itself off). Global warming? A global yawn, Al Gore to the contrary nothwithstanding. Mountaintop removal? Locals in West Virginia and Kentucky like flat land.

One of the most enduring environmental miscalculations about coal has been getting electric utilities to shut down old, dirty coal plants. Over the past 40+ years, it has seemed that old coal plants never die, they just get patched up, equipped with protheses, pushed down in the dispatch order, and go on making watts and (increasingly less) pollution.

This coal conundrum goes back to the days of the original Clean Air Act in 1970. Environmentalists at the time, among them the legendary, long-serving David Hawkins of the Natural Resources Defense Council (who, except for a brief sojourn as clean air chief in Jimmy Carter’s EPA, has served continuously with NRDC since its founding), reckoned that shutting down the creaking, elderly coal plants was only a matter of time, technology, and economics. The old dirties would collapse of their own weight and age-induced infirmities. So the original law included provisions “grandfathering” the old coal plants, policy pushed by the electric companies that built and owned them, such as Cleveland Electric Illuminating. The thrust of the new air law was on new plants.

It turned out, however, that there was plenty of life left in those rusting, belching hulks. The major changes in the Clean Air Act, version 1977 (originally planned for 1974) didn’t shut them down. Some obscures provisions of the act, plus the political prestidigitation of old pros such as Ohio’s Democratic liberal lion, Sen. Howard Metzenbaum, kept them alive. Ohio, it turns out, was the home of a fair number of the big dirties. Then came the 1990 amendments and their focus on acid rain. A lot of big old coal plants got wet limestone scrubbers (despite the self-serving and false claims of the utility industry that they wouldn’t work). The plants lived.

The plants themselves often outlived the companies that built them. CEI is long gone as a free-standing utility. It now operates as “The Illuminating Company,” basically a brand name under the FirstEnergy holding company. But the Eastlake plant still squats on the Lake Erie shore, where it has been generating 1,200 MW of coal-fired power since CEI built it in 1953.

Now, in 2012, the old home for coal is beginning to see its ranks of the lame and the halt thinning. Coal-burning utilities in the Midwest and South are announcing closures, blaming them on the latest round of EPA bullying. As long as that doesn’t harm reliability, I have no problem with that outcome. I’m skeptical about utility claims that shutting down these increasingly marginal plants will cause the lights to even flicker.

But I’m not persuaded that the recent EPA rules, particularly the mercury ukase, have all that much to do with it. Instead — and I credit my perspicacious editor Bob Peltier for first pointing this out — it was the failure of a major initiative on the wish list of the major environmental groups (that means you, Dave Hawkins) and utility executives interested in gaming the regulatory environment (Jim Rogers, anyone?) that kept a lot of coal plants running beyond their time. The prospect of cap-and-trade legislation, which many analysts figured was a slam-dunk when the Obama administration rolled into Washington in 2009 with Democratic majorities in both the House and Senate, kept the coal plants alive. They would become generators of carbon dioxide allowances when the utilities agreed to shut them down in response to the caps. The CO2 reductions would have become monetized and, no doubt, securitized as well. The companies would have been paid to shut plants it was probably in their economic interest to close eventually anyway.

When that didn’t happen, there was little need to keep the plants running. The new EPA rules were an easy excuse to start closing them down, particularly because of a second factor that clobbered the plants’ economics: natural gas.

The shale gas revolution — and, no, I don’t think that’s hyperbole — rendered the oldest, least efficient coal plants uneconomic. Gas prices are at historic lows; there doesn’t seem to be any chance they will go up significantly anytime soon. Need new generation? Build gas, reap capital cost savings, fuel savings, and tangible environmental savings, including significant CO2 reductions, while maintaining reliability. Seems like a no-brainer to me.

And that brings us back to Eastlake, in continuous operation since I was 9 years old, burning some 4 million tons of coal each year, providing jobs for over 300 people, and putting more than $6 million annually into the local tax base. FirstEnergy on January 26 announced it would close the plant and five other coal burners, including a very old unit in Williamsport, Md., near where I live. The plants will be out of service by the fall.

A FirstEnergy spokesman said, “This was a very tough decision for us. It’s not a good day here at FirstEnergy. This is the real result of the environmental rules as they were laid out.” That’s true, but not exactly as the spokesman meant it. The real culprit wasn’t a rule EPA adopted, but one that Congress, probably unwittingly, prevented. Oh, and add the working of the energy market to the list.