EPA regulations for coal-fired power plants could force shut downs

New regulations from the Environmental Protection Agency mean a lot of coal-fired power plants will shut down soon, said James Wood, deputy assistant secretary for the U.S. Department of Energy.

He said the approval of new rules for air pollution, water pollution and waste disposal could result in the retirement of between 35 and 70 gigawatts of coal-fired power generation nationwide, with EPA predicting much less and some analysts predicting much more.

“Number one, electric rates are going to go up,” he said. “Number two, whether or not construction jobs in the green industry are created, I think there’s virtually no manufacturing jobs that are likely to be created from the replacement of coal. Three … transmission grid stability is likely to emerge as a major issue, both because of the shutdowns and because of the intermittency of renewables.”

He said the effects experienced where the plants are located could mirror those in Massachusetts, where Dominion announced this month that it would close its Salem Harbor power plant.

“The ISO of New England [the federally created organization that overseas the power grid in New England] said this threatens the reliability of New England, northeastern Massachusetts and the Boston power grid,” Wood said. “What also happened immediately is the mayor of Salem got on TV and said this will have a major impact on Salem [because] this is Salem’s largest taxpayer.”

Speaking on the second day of the Eastern Coal Council’s annual conference, he said some units could be shut down simply because it’s not possible to find the materials and skilled labor to complete upgrades by tight EPA deadlines.

The burden of the increasing costs that will result, he said, will be borne primarily by “the not so wealthy,” he said.

And he added that this doesn’t even take into account greenhouse gases and the possibility that carbon dioxide emissions could also be regulated in the future.

He said the most unsettling thing is what could happen to manufacturing jobs in the event of a shutdown in places like Conesville, Ohio, where the local power plant has 10,000 workers within a 10-mile radius.

With shrinking DOE funding for coal industry projects, he said the private sector will have to pick up more of the research and development costs of new technology to comply with added EPA rules – and, ultimately, the solution to replace lost federal funding will be for utilities to pass on the cost to utility rate-payers.

Speaking for engineering firm Burns & McDonnell, Megan Parsons said these days utilities aren’t coming to the company for help with developing coal plants. Instead, they’re looking at environmental retrofits – and studying whether it’s viable to even keep the plants open.

“A lot of utilities are retiring their coal units,” she said. “So if you combine that with what’s happening with shutting down coal and with the fact that we’re seeing a 10 to 15 percent demand growth by 2020, you can see that we’ve got a problem. We need to be installing some baseload generation resources.”

She said the most likely option, which is already occurring to replace them, is natural gas, as the development of shale gas has had a huge impact and has driven down prices.

“The concern that a lot of utilities have is that we’re gong to get to this point in time [when] they’re going to be heavily dependent on natural gas, those gas prices are going to shoot through the roof, and it’s going to get passed down to you all [rate-payers],” she said.

Lisa Moerner, director of environmental policy and sustainability for Dominion, said her company is shutting down some coal plants, though it’s also bringing new plants online, including the Virginia City Hybrid Energy Center in Wise County in Southwest Virginia.

“Coal is a very important tool for Dominion,” she said. “It’s a very important part of our portfolio and will continue to be a very important part of our portfolio, but we shouldn’t kid ourselves: There are a lot of challenges for coal right now … and what we’re doing is making investments in coal right now to help us sustain coal as a fuel for the future.”

She said environmental controls, though expensive, can be added to some coal plants. For others it won’t make financial sense, so they’ll be closed or converted to something else.

“We can’t overlook the fact that there are substantial regulatory risks related to coal, and we have to take that into account when we make our decision,” she said.

American Electric Power, whose subsidiary Appalachian Power delivers power to most of Southwest Virginia, has estimated that 25 percent of its coal fleet will be retired in the face of regulation.

The Charleston Daily Mail reported last week that AEP President and Chief Operating Officer Charles Patton included the Clinch River power plant in Russell County on its list of planned closures, though company officials would not confirm the announcement Tuesday.

John Shepelwich, a spokesman for Appalachian, said the plant could be closed, but that decision will depend on an analysis that’s not yet complete.

Glen Besa, director of the Virginia Chapter of the Sierra Club, said it will be a good thing for all of these coal plants to close because the nation needs to transition to renewable energy.

“A lot of these coal plants were built 50 or 60 years ago. A lot of these coal plants are really archaic. They represent old technology, and really the main reason they’re operating to this day is … because they had been grandfathered into clean air protections,” he said. “All that the EPA is doing today is requiring them to bring those coal plants up to current standards. So if they can’t meet those standards, then they’re going to have to take other action, and we think that action should be investments in efficiency and renewables.”

Besa said hundreds of millions of dollars in subsidies paid to the coal industry could be taken away and spent to help diversify the coal region’s economy, including investments in the manufacturing of renewable energy equipment.

With stronger environmental regulation, he said job loss to overseas competition could be prevented with a requirement that all imported goods adhere to environmental and labor standards similar to those in the United States.

“As we move forward, we’ll find solutions to any challenges that are out there…. Certainly in phasing in a clean energy economy over the next 20 years, we will address whatever challenges arise just like we addressed challenges in building up our industrial base based on coal,” he said. “There’s always technological challenges in whatever direction you go and I’m confident that with American ingenuity we’ll address those challenges as they arise.”

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