FirstEnergy, AEP, and GenOn Continue Trimming Coal-Fired Fleet Size

Just two weeks after FirstEnergy Corp. said it would close more than 2 GW of six older coal-fired power plants Ohio, Pennsylvania, and Maryland by September, the Akron, Ohio–based company in early February said it would retire three more plants in West Virginia. The company cited “high costs” to implement the Environmental Protection Agency’s (EPA’s) recently finalized Mercury and Air Toxics Standards (MATS).

FirstEnergy said it would shutter the Albright, Willow Island, and Rivesville Power Stations in West Virginia by Sept. 1, 2012. The total capacity of these regulated plants is 660 MW—or about 3% of FirstEnergy’s total regulated and competitive generation portfolio. “Recently, these plants served mostly as peaking facilities, generating, on average, less than 1 percent of the electricity produced by FirstEnergy over the past three years,” the company said in a statement.

A year-long study of how changes in environmental regulations would impact the company’s older, unscrubbed regulated coal fleet by FirstEnergy subsidiary Mon Power determined that “additional investments to implement MATS and other environmental rules would make these plants even less likely to be dispatched,” FirstEnergy said. “As a result, the decision was made to retire these West Virginia plants rather than continue operations.”

FirstEnergy had earlier revealed plans to close six other plants, mostly peaking or immediate generating facilities, with a capacity of 2,689 MW—or 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 company made a similar determination to shutter those plants after weighing, through a cost-assessment review, the potential impact of the final 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.

Fewer than 105 employees are expected to be affected by the West Virginia plant closures.

All announced retirements are subject to review for reliability impacts by regional grid operator PJM Interconnection.

AEP to Trim Coal Retirement Capacity

American Electric Power (AEP) may continue operating Big Sandy Unit 2, an 800-MW coal-fired power plant in Kentucky, if state regulators approve a 31% rate increase to help pay for pollution controls. The measure would trim the company’s planned coal retirements to 5,138 MW, not 5,909 MW, as the company had announced last June.

In June, AEP had said that to comply with environmental regulations, it would need to shutter nearly 6 GW of coal-fired generation; 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–fired generation.

The compliance plan, estimated to cost between $6 billion and $8 billion through 2020, included retiring Units 1 and 2 of the 1,078-MW Big Sandy Plant in Louisa, Ky., by December 2014 and rebuilding them as a 640-MW gas plant by December 2015.

“We later decided to apply to the Kentucky Public Service Commission to get regulatory approval for a rate increase to cover the cost of installing a scrubber on that unit instead of retiring it,” AEP spokesperson Melissa McHenry told POWERnews. “If we don’t receive cost recovery approval for the scrubber, Big Sandy Unit 2 will be retired. We still plan to retire [the 278-MW] Big Sandy Unit 1.”

The company recently began commercial operation of the 580-MW Dresden natural gas–fired plant in Ohio. That $366 million project will supply power to AEP’s Appalachian Power customers in West Virginia, Virginia, and Tennessee.

“Natural gas will become an increasing part of AEP’s generating portfolio in the coming decades as a result of the development of shale gas reserves and new environmental regulations, but we continue to believe our company and our nation need a diverse electricity generating portfolio that also includes investment in cleaner coal technologies, nuclear and renewable power,” said Nicholas Akins, AEP’s president and CEO.

A majority of units AEP slated for retirement in 2014 are located in Ohio and West Virginia. Earlier this month, Ohio-based FirstEnergy said it would close 3,349 MW of coal-fired capacity in Ohio, West Virginia, Maryland, and Pennsylvania. That company cited “high costs” to implement the Environmental Protection Agency’s recently finalized Mercury and Air Toxics Standards as the reason for the planned closures by Sept. 1, 2012.

GenOn to Shutter 3 GW of Coal Capacity in Penn., Ohio, and N.J.

Houston-based GenOn is the latest of a string of power firms to announce planned power plant closures in Pennsylvania, Ohio, and New Jersey. The company formed in December 2010 through the merger of Mirant Corp. and RRI announced on Feb. 29 that it would deactivate 3,140 MW of generating capacity in PJM’s operational region between June 2012 and May 2015, citing insufficient “forecasted returns on investments necessary to comply with environmental regulations.”

The units to be deactivated are the 460-MW Elrama plant in Pennsylvania (June 2012); the 217-MW Niles plant in Ohio (June 2012); the 401-MW Portland plant in Pennsylvania (January 2015); the 732-MW Avon Lake plant in Ohio (April 2015); the 330-MW New Castle plant, the 597-MW Shawville plant, and the 243-MW Titus plant, all in Pennsylvania (all by April 2015); and the 160-MW Glen Gardner plant in New Jersey (May 2015). All are coal-fired facilities except the dual-fuel Glen Gardener plant, which can burn natural gas or oil.

“The units expected to be deactivated and timeframes are subject to further review based on market conditions,” GenOn said in a statement. “In particular, while the initial analysis for additional environmental controls at Avon Lake indicated that forecasted returns on those investments were insufficient, the evaluation of the returns on those environmental controls is continuing.”

The company also said that the coal-fired units at Shawville, which is leased, will be placed in long-term protective layup. The required lease payments will continue to be made and the assets will be maintained in accordance with the lease.

Other expected fleet reductions are the May 2012 expiration of a tolling agreement for the 630-MW Vandolah facility in Florida; the previously announced retirement of the 482-MW Potomac River generating facility in Virginia in October 2012; and the previously announced retirement of the 674-MW Contra Costa generating facility in California in May 2013, subject to regulatory approvals. Additionally, in January 2012, GenOn sold the previously mothballed 586-MW Indian River generating facility in Florida for $11.5 million.

The fleet reductions, taken together with 3,140 MW of deactivations announced in late February, total 5,512 MW of generating capacity. GenOn will have 19,490 MW of generating capacity after the deactivations and fleet reductions. It plans to add the 719-MW Marsh Landing generating facility in California, which is scheduled to become operational in mid-2013.

—Sonal Patel is POWER’s senior writer. This material first appeared in POWERnews.

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