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Thomson Reuters
Climate & Energy

EPA’s new carbon plan won’t slow coal unit shutdowns: utilities

The responses suggest that a years-long shift away from coal – driven primarily by competition from cheap and abundant natural gas, the rise of renewable energy sources and anti-pollution rules – will likely continue on the basis of economics and not regulation.

U.S. coal-fired power generation has fallen more than 40 percent since a peak in 2007, while natural gas-fired generation soared by about the same amount, according to the Energy Information Administration. The changes triggered mass layoffs and bankruptcies in America’s coal sector.

Utilities’ demand for U.S. coal is projected to fall further this year, by around 2.5 percent to 648.2 million short tons, the lowest in 35 years, according to the EIA.

Trump has vowed to help the coal industry by rolling back environmental regulation. But the EPA said its proposal was not specifically intended to bail out the coal industry.

“Unlike the last administration, we are not using this authority to either advantage or disadvantage particular types of technologies,” the EPA said in an emailed statement provided by spokesman Michael Abboud.

The National Mining Association, which represents the U.S. coal industry, said it hoped the rule would help the coal sector, arguing that premature coal plant retirements could raise consumer costs by tightening electricity markets.

“While I can’t predict what plant owners will do, one would hope that they would consider the impact of any decision on the average American,” said NMA spokeswoman Ashley Burke.

DRIVEN BY ECONOMICS

Shortly after the EPA unveiled its proposal, U.S. power plant operator NiSource Inc announced in September that it may accelerate the retirement of its coal plants instead of delaying them.

“Technology and market changes continue to transform the energy industry, opening more competitive options and it’s the primary driver of the changes being considered for our system,” said Violet Sistovaris, president of NiSource’s NIPSCO division.

Oklahoma utility OGE, for instance, is converting two units at its Muskogee plant in eastern Oklahoma to natural gas to comply with the federal Regional Haze Rule by 2019.

“We have a legal deadline to comply with Regional Haze which leaves us no time to do anything than move forward with the conversion,” said spokesman Brian Alford.

NRG, one of the largest U.S. power companies, said customer demand was a driver.

“The energy industry is reducing its carbon footprint based on economics and customer demand. NRG is part of this momentum,” said spokesman David Knox.

FirstEnergy Solutions [FE.UL], which has lobbied the Trump administration to take emergency measures to subsidize coal plants, did not comment on the ACE plan. But the company confirmed it has told a regional grid operator it still plans to shut 12 units at three plants in West Virginia, Ohio and Pennsylvania from 2019 to 2022.

Three utilities – AEP, OPPD and PPL – were less certain about the impact of ACE, noting that the proposal gives states regulatory power. If implemented, states would get three years to submit their plans to the EPA, which has said it expects the rule to be finalized early next year.

Duke Energy, which boasts 7 million electricity customers in six states, agreed that the states are a wild card, but said the timeline is too long for it to change course now.

“Based on what we know right now, we do not have any plants whose future would be affected by the adoption of the ACE rule,” said spokeswoman Shannon Brushe.

Editing by Richard Valdmanis, Dan Grebler and David Gregorio

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