If there is a “war on coal,” then that war claimed a few casualties close to home last month. First Energy announced it would close its Mitchell and Hatfield’s Ferry coal-fired power plants this fall rather than spend an estimated $275 million upgrading the plants to meet EPA’s new mercury and air toxics standards (MATS).
The closings eliminate 10 percent of First Energy’s total capacity and 380 direct jobs. Countless more jobs could be lost as the impact of the plants’ lost wages and lost spending on supplies and services ripple through local economies.
The announcement came as a surprise to many, particularly for Hatfield’s Ferry because that plant recently spent more than $650 million upgrading its environmental equipment. When you spend that kind of money, you would think the plant should operate for a while. Evidently not.
Across its system, First Energy now must spend more than $600 million on MATS compliance. Unfortunately, the $275 million required for our two plants could not be justified.
In the past, most power generation was regulated. The costs of construction and subsequent improvements in plants were included in rates paid for electricity. But some years ago, Pennsylvania deregulated power generation to allow competition. Now additional pollution controls add costs that can impair a plant’s competitiveness.
To be fair, some coal plants are victims of a perfect storm. Plants more than 50 years old are not good candidates for upgrades. The U.S. economy remains sluggish, dampening electricity demand and prices. Low natural gas prices make it attractive – both economically and environmentally – for power generators to rely more on gas and less on coal to generate electricity, although refueling Hatfield’s Ferry with gas apparently was not an option.
The Obama administration says there is not a war on coal, pointing to its funding of research on new emissions technologies. But the administration’s aggressive compliance timetables and constantly shifting emissions standards have pushed many power generators to abandon their coal plants – even ones like Hatfield’s Ferry with years of service life left - rather than chase standards that never seem to be enough.
According to published reports, Hatfield’s Ferry already has invested nearly $1 billion on environmental controls, including scrubbers that remove 98 percent of sulfur dioxide emissions and some mercury. Other equipment eliminates nearly all fly ash emissions. Yet this was not enough.
There has to be a better, more flexible approach to environmental regulation so that plants with significant remaining service life and those that have made significant investment in environmental controls can continue to operate. Otherwise, we are wasting capital, killing jobs, and devastating local economies – all for minimal environmental gains.
Moreover, if economic growth returns to normal levels, we may still need the generating capacity that EPA seems so willing to sacrifice.
One industry group estimates that about 280 coal-fired plants will close in the coming years, including more than 2,500 megawatts of AEP’s coal capacity in neighboring Ohio and West Virginia by 2015, due at least in part to environmental compliance costs.
The administration may not call it a war on coal, but whatever it is, the casualty list is growing.
Jeff Kotula is president of the Washington County Chamber of Commerce.