Environmental Rules Prompt Closure of More Coal Plants, Pause Development of New Plant

Citing newly finalized and proposed environmental regulations that could make costs uncertain, FirstEnergy Corp. on Thursday said it would shutter six older coal-fired power plants with capacities totaling 2,689 MW in Ohio, Pennsylvania, and Maryland by September. The same uncertainties prompted a major backer of a $2 billion coal-fired power plant planned for Washington County in Georgia to pull its funding.

FirstEnergy to Shutter Plants in Ohio, Pennsylvania, and Maryland

Akron, Ohio–based FirstEnergy said the six plants slated for closure by Sept. 1, 2012, are mostly peaking or immediate generating facilities that produce about 10% of the company’s power. They are: Bay Shore Plant, Units 2-4, Oregon, Ohio; Eastlake Plant, Eastlake, Ohio; Ashtabula Plant, Ashtabula, Ohio; Lake Shore Plant, Cleveland, Ohio; Armstrong Power Station, Adrian, Pa.; and R. Paul Smith Power Station, Williamsport, Md.

The decision stems from a cost-assessment review to implement the Environmental Protection Agency’s (EPA’s) final Mercury and Air Toxics Standards (MATS) and other rules, including pending greenhouse gas emission–curbing regulations, water intake and coal combustion residual regulations, and rules that could replace the Clean Air Interstate Rule (CAIR), including the Cross-State Air Pollution Rule (CSAPR) that was stayed by the courts on Dec. 30, 2011.

About 529 employees will be directly affected, the company said, though it noted the final number could be lower because some are considered for open positions at other company plants. The plant retirements are subject to review for reliability impacts, if any, by PJM Interconnection, the company said.

"This decision is not in any way a reflection of the fine work done by the employees at the affected plants, but is related to the impact of new environmental rules," said James H. Lash, president, FirstEnergy Generation and chief nuclear officer. "We recently co completed a comprehensive review of our coal-fired generating plants and determined that additional investments to implement MATS and other environmental rules would make these older plants even less likely to be dispatched under market rules. As a result, it was necessary to retire the plants rather than continue operations."

FirstEnergy said it was finalizing MATS compliance plants for remaining coal-fired units. It added that since 1970 when the Clean Air Act became law, more than “$10 billion” has been spent in environmental protection efforts.

Cobb EMC Backs Out of Plant Washington

Last week, the board of Cobb EMC voted to remove funding of the 850-MW Plant Washington project from its 2012 budget. The Marietta cooperative was expected to provide nearly 40% of the $2 billion project’s funding. Its decision leaves three other cooperatives—Central Georgia, Upson, and Washington, part of the POWER4Georgians coalition developing the project—scrambling to find new ways to keep the project alive. Since it was established in 2009, six electric membership corporations (EMCs) have left POWER4Georgians.

In a press release, Cobb EMC said its decision was based on new federal environmental rules that would make project costs uncertain and a finding that energy produced by the project wasn’t needed enough to justify more costs associated with fighting appeals against permits for the project. The plant has so far procured all the state environmental permits it needs.

“While we are disappointed in the decision of Cobb EMC’s board to no longer participate in Plant Washington, we respect their decision. However, this decision does not derail our commitment to successfully develop Plant Washington,” POWER4Georgians said in a statement on Tuesday. “Because we anticipated this might occur due to the political and transitional climate within Cobb EMC, for some time we have been exploring the possibility of bringing in additional partners to help complete the Plant Washington project.”

Cobb EMC’s withdrawal from the project follows LS Power’s cancellation of the 1,200-MW Longleaf coal project last December, Georgia’s only other planned new coal project.

Sources: POWERnews, FirstEnergy, Cobb EMC, POWER4Georgians

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