Plant closure

Local officials and nonprofits are exploring solutions to the economic impacts of future coal plant closures

The Powder River Basin Resource Council launched a four-part webinar series during the COVID-19 pandemic to help communities in Wyoming and beyond prepare for the ongoing transition from coal.

“We are certainly much closer to a trough than we are to a peak," said an NTEC executive as the struggling company agreed to an installment plan with Campbell County.

“The simple reality is that the proposed carbon capture retrofit at the San Juan Generating Station is not financially viable,” said a co-author of a study dismantling the promoter’s pitch.

The disruption is happening sooner than anyone thought,” one official said. “There were plans that it would happen by 2030, 2035, 2040. Market conditions are bringing those sooner and sooner.

Even Kentucky is seeing an energy-industry makeover with retirements of the Drakesboro and Elmer Smith power plants this year. Consensus is that the state’s power-generation sector will continue to modernize.

“The fact is the current business market for coal-based energy is simply no longer sustainable,” an influential state legislator said. “We must be proactive in helping those communities that this will adversely effect.”

As hundreds of workers lose their jobs this months and hundreds more face layoff this winter, the fallout “points to the need to help workers impacted in the transition away from fossil fuels.”

Closures last year of the J.M. Stuart and Killen coal-stations have decimated small-town economies. “The only thing we had going for us, really were the power plants,” said a local sheriff.

Cleanup liabilities and economic questions surrounding the biggest coal-fired plant west of the Mississippi have killed a bid to save the plant and its companion mine, which employ over 700 people.

Nagging issues persist around the proposed acquisition of a failing power plant in Arizona, including on cleanup liabilities, worker benefits and deferred-maintenance costs.

As part of a growing national wave of coal-plant retirements, Montana-Dakota Utilities’ closings will include a 54-year-old plant encumbered by uncompetitive operating and maintenance costs.

Likely closure of the coal-fired Navajo Generating Station is laying bare the dangers of relying too heavily on a one-note economy. “There's no comparison” to such jobs, one worker said.

A study of U.S. coal markets concludes that 2018 will set a record for permanent shutdown of coal-fired plants nationally. States with sizeable closures on the horizon include Florida, Indiana, Kansas, Kentucky, Maryland, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia and Wisconsin. “The competitive environment for coal-fired power in the generation marketplace is becoming ever more challenging as the price of renewables continues to fall and as natural gas prices are expected to remain low for the foreseeable future,” the author said.

A coal-fired generation station in northern Texas will be retired in 2020 because it can no longer turn a profit, according to its majority owner, Ohio-based American Electric Power, one of the biggest power producers in the country. The closure is the sixth of its kind announced in Texas in the past several months. “The plant was no longer competitive,” an AEP spokesman said.

Private equity company Middle River Power LLC is ending its bid to buy Navajo Generating Station, the biggest coal-fired power station west of the Mississippi River.

Market forces have aligned with public health concerns and environmental concerns to propel a power-generation shift that is epitomized by the impending shutdown by CPS Energy of the coal-fired J.T. Deely plant in south-central Texas. Resisting such change would prove unprofitable, writes a San Antonio editorial board: “The risk, beyond premature death or an unnecessarily warmer world, is that other nations will innovate as we stagnate.”

FirstEnergy announced this week it will close its three remaining coal-fired power plants in Ohio and its last one in Pennsylvania. The company said the plants cannot compete with electricity produced by renewables and natural gas. Some observers cautioned that the announcement may be largely political, however, as FirstEnergy continues to seek federal subsidies to keep the plants online. “We're talking about billions of dollars being used to bail out a failing industry, when these closures are inevitable and irreversible,” one critic of that strategy said. “There are a lot better uses for that money.”

Oklahoma Gas & Electric Co.’s decision not to renew a long-term power purchase agreement with the AES Shady Point coal-fired generation station puts the plant at imminent risk of closure as part of a trend that has taken root coast to coast. "That is happening all over the country," said Loyd Drain, a U.S. energy consultant. "Renewable prices have gone down so much, a lot of these coal plants around the country have operated at a loss for consumers because replacement power is cheaper."

The Tennessee Valley Authority, which supplies electricity to consumers in seven states, is weighing whether to close more coal-fired power plants after having already shut down half of the 59-plant fleet it once operated. The TVA has generated less than 30 percent of its electricity from coal this year, down from almost 70 percent in the 1980s. The issue boils down to a question of costs, and how coal-generated power has become less competitive. "Say you're driving a 70-year-old car, what would be required to keep it on the road?" said TVA President Bill Johnson. “They are rather expensive to maintain.”

With the U.S. coal industry “in frank decline,” the well-being of communities in the four corners region of Arizona, Colorado, New Mexico and Utah is at risk as three coal-fired plants in the region becoming increasingly uncompetitive. Activists, educators and elected officials have responded by pressing for more initiatives meant to diversify the region’s economy, including a pilot scholarship project at Navajo Technical University. “This is a unique program that specifically helps communities affected by the decline in the coal industry,” said the university’s president. “It’s making many opportunities available for Navajo students, but there’s still tremendous need out there.”

Community activists in Colstrip, Mont., are urging the corporate owner of Colstrip Power Plant to invest in the excavation and removal of its coal-ash ponds once two of the plant’s three electricity-generating units shut down in 2022. A report by the Northern Plains Resource Council concludes that such a reclamation initiative would help sustain the town’s declining economy. “Doing a thorough cleanup now will employ more people, make the land more attractive to businesses and industries looking to come to Colstrip and potentially will keep taxpayers from footing the bill.”

Westar Energy will close the coal-fired Tecumseh Energy Center near Topeka on Oct. 1, several years ahead of schedule. The company said it will also shut down fossil-fuel-powered units at electricity plants in Colwich and Wichita as part of its merger with Great Plains Energy, the owner of Kansas City Power & Lighter. A Westar spokesperson said the merger, “along with the addition of renewable energy,” allows for the shutdowns, which won’t affect service.

Lawmakers in New Mexico are grappling with how to manage the imminent closure of a coal-fired power plant in San Juan County in a way that will protect the local tax base. The state is also exploring job-retraining programs in the area alongside policies that would encourage investment in local renewable energy and natural gas projects. The San Juan Generating Station produces millions of dollars in tax revenues for the county, and its owner, Public Service Company of New Mexico, is seeking a state deal that would support a transition to other forms of more economical power generation.

The town of Rockdale, Texas, lost much of its tax base with the recent shutdown of the coal-fired Sandow Power Plant. Over 300 jobs were eliminated by the closure in January, and the local school district will collect only $614,000 in property taxes this year from the plant’s owner, Luminant, compared with $4.1 million last year. “We knew that it was coming,” said one local official. “We just didn’t think that it was coming this fast.”

The Public Service Company of New Mexico, the biggest utility in the state, is doing right by its customers in planning to close the coal-fired San Juan Generating Station by 2020 and replace it with renewable resources, gas-fired generation and power-storage technology. The transition promises to provide “important and beneficial economic development opportunities for our state and its rural communities,” writes the author, who notes that the wind and solar industries have already invested $4.4 billion locally.

In announcing the retirement by 2020 of its 54-year-old coal-fired electricity plants, a Kentucky city is joining a market tide toward transition. The closure will affect 60 employees, and while the city of Owensboro will continue to get electricity from some conventional sources, it is now pursuing a solar power purchase agreement. “It’s just as in when your car gets older, or any other piece of mechanical equipment, it becomes harder and harder and more expensive to maintain it,” said a utility spokeswoman of the decision to close Elmer Smith Station.

The Montana Public Service Commission approved a sale that moves ownership of the Colstrip Power Plant to a Canadian corporation in a deal that includes a $4.5 million payment to the city of Colstrip as part of an arrangement meant to blunt the impact of the eventual closure of the plant. Commissioners said the deal “appears to be in the public interest, for Montana consumers and the state.”

Citing the “historically low” cost of renewables, Xcel Energy is pressing for state approval to close two coal-fired generators in Colorado a decade earlier than planned. The plants, part of the Comanche Generating Station in Pueblo, would be retired in 2022 and 2025 under the proposal, and would be replaced by a pair of existing gas-fired plants, three windfarms and five utility-scale complexes.

The 77-acre site of an abandoned Gary, Ind., coal-fired electricity plant that closed in 2012 is slated to become a national data-storage center. Plans call for five buildings of more than 100,000 square feet each. The project, seen as a “next chapter” for the area, will help restore $4.5 million in tax revenue lost when the State Line plant shut down. 

In anticipation of the closure of Colstrip Generating Station in Montana, one of the power plant’s owners has pledged $3 million “to help its host community transition beyond coal.” The commitment brings the total in such funding from the station’s owners to $10 million. “Any help is a good thing,” said one advocate for keeping the struggling plant alive. “There’s going to have to be a lot done.”

As market trends continue to shrink the coal industry and plants shut down, communites are faced with the challenge of transitioning. With two of four units closing by 2022, the community of Colstrip, Montana prepares for the phaseout.

With the closure of the Sandow Coal Power Plant a few weeks off, the east-central town of Rockdale is trying to come to grips with the loss of hundreds of jobs. The plant is one of three being shuttered by Luminant, the biggest power producer in Texas. “Whatever happens, everyone agrees Rockdale needs to attract more industry and employers.”

A wave of coal-fired electricity plant retirements— in Kentucky, Missouri, Montana and Texas — add to a toll that continues to add up nationally. The closures accelerate a trend in which nearly twice as much coal-generation capacity will be retired in 2018 compared to 2017.

The owner of a relatively new coal-fired power plant in Montana says it will probably close next year after having lost money since 2014. The closing will affect about 30 people and will put the company, Heorot Power, further behind on $2 million in delinquent tax obligations to local schools and government.

Homer City, Penn., is typical of communities facing difficult economic transition as its coal-fired power plant, faces likely closure. “Reality has triumphed over wishful thinking,” says one local coal broker.

Two imminent power-plant closings in Texas spell difficulties for a coal mine in Wyoming that depends on those plants for more than its demand. The closures of the Monticello and Big Brown plants by utility company Luminant will add to an expected shutdown in 2018 nationally of more than 13,600 megawatts of coal-fired power, compared with 7,600 in 2017.