Plant closings down to dollars and cents

August 18, 2013

A mighty conundrum most likely played into the decision to close the Hatfield’s Ferry Power Station in Greene County: Which is worse, the disease or the treatment?

Prior to 2009, the huge towers sitting along the Monongahela River near the Fayette County borough of Masontown were spewing sulfur dioxide and mercury into the atmosphere, forcing Allegheny Power to invest $650 million to install scrubbers to remove those elements from the emissions.

Nonetheless, FirstEnergy Corp. announced last month it was closing both the Hatfield’s Ferry and Mitchell power stations, the latter of which is located in Union Township in Washington County. Mitchell is also a coal-fired power plant, and both are due to be shuttered in October. The company said the decision to deactivate the power plants was because of the high cost of bringing them into compliance with Environmental Protection Agency standards, and, moreover, the closures were based on the cost of compliance with current and future environmental regulations, as well as the low market price for electricity.

FirstEnergy said it would cost $925 million for it to comply with Mercury toxic-air regulations. About 30 percent of those costs, or $278 million, would be required to bring Hatfield’s Ferry and Mitchell into compliance.

The cost of upgrading older, coal-fired plants is high, there’s no question about it. Mitchell was built in 1949 and Hatfield’s Ferry opened in 1969. They have a total capacity of 2,089 megawatts, a formidable 10 percent of the company’s electricity generation. It was not lost on the state and region’s political leaders that 380 employees would be losing their jobs. Blistering denunciations came from all levels of government, from U.S. Sen. Pat Toomey and U.S. Rep. Tim Murphy, both of whom categorized the workers as “unfortunate casualties” in President Obama’s alleged “war on coal.” Murphy said the administration “is going to ignore any efforts by power companies to invest in cleaner plants and, in fact, (punish) power plants for investing huge amounts in cleaning up.” State Rep. Pam Snyder questioned the timing and motives behind closing the plants, calling for an objective analysis of the decision, including such factors as contract negotiations with the utility workers union, the effect on ratepayers and the reliability of the regional power grid.

State Sen. Tim Solobay said the EPA made a difficult situation simply impossible.

“Coal was already facing cheaper energy competition and seeing its share of the energy market decline,” he said. “But losing it from our energy portfolio seems risky and premature.”

More recently, PJM Interconnection, the electricity grid manager for the mid-Atlantic region, completed a reliability study that determined there would be ramifications resulting from the two plants shutting down and the necessary updates could not be completed by Oct. 9, the closing date. This could possibly result in FirstEnergy agreeing to temporarily keep the plants open until upgrades can be made.

What we see down the road is a possible conversion from coal-powered plants to gas-generated plants, assuming gas prices stay relatively low. And this is something FirstEnergy discussed last fall. We don’t know what’s going to happen at Hatfield or Mitchell, and it seems clear that no one else does, either.

But one thing we do know: It’s all about dollars and cents.



blog comments powered by Disqus