Ownership Change Results in Closure of Three Coal Units

Arizona Public Service (APS) has purchased Southern California Edison’s (SCE’s) ownership share in the Four Corners Power Plant Units 4 and 5.

The two units—located on Navajo land in Fruitland, N.M.—generate a combined 1,540 MW. Ownership had previously been split between six companies, with SCE owning the largest portion (48%) and APS owning 15% prior to the deal. APS also owns 100% of Units 1, 2, and 3.

The agreement was originally announced in November 2010. The change in ownership allowed APS to close Units 1, 2, and 3 permanently, which occurred on Dec. 30. Those units—with a combined output of 560 MW—were put into service in 1963 and 1964. They were the first mine-mouth units to utilize sub-bituminous coal from the Four Corners region.

The final purchase price for SCE’s share of the plant was $182 million. There will be more money invested by APS however, because Units 4 and 5 must install selective catalytic reduction equipment by July 31, 2018, in order to meet U.S. Environmental Protection Agency requirements.

Even with the closure of the first three units, APS’s portion of plant output will actually increase from 791 MW to 970 MW because of the acquisition. The company does not plan to layoff any of the plants 434 workers as a result of closing the older units. Employees previously responsible for operating and maintaining Units 1, 2, and 3 will focus on decommissioning activities instead. Any reduction in the workforce is expected to come through normal attrition.

“Our plan for the plant moving forward saves APS customers nearly a half-billion dollars over other energy sources and maintains a highly reliable, cost-effective source of electricity generation for APS and other users in the Southwest,” said Mark Schiavoni, executive vice president of operations. “Along with natural gas, nuclear, renewables and energy efficiency, coal has an important place in our company’s balanced energy portfolio.”

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)

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