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Released October 16, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--On Friday, Luminant (Dallas, Texas), a subsidiary of Vistra Energy Corporation (NYSE:VST) (Dallas), announced that it would close two coal-fired power plants in Texas for economic reasons. The plants are the Sandow Power Plant in Milam County and the Big Brown Power Plant in Freestone County. The plants have two generating units each and a combined nameplate capacity of 2,300 megawatts (MW). In the prior week, Luminant announced it would close its Monticello coal-fired power plant in Titus County, which has a nameplate capacity of 1,980 MW.
The Monticello and Big Brown plants began operating in the 1970s, while Sandow began operating in 1981. The closures will affect more than 800 employees. For more information, see Industrial Info's plant profiles on the Sandow, Big Brown and Monticello plants. The plants are scheduled to cease operations in January and February next year. Each plant is subject to a 60-day reliability review by the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) to determine if the plants are needed for reliability to the ERCOT grid, which accounts for about 90% of Texas' electric load.
The announcements come as a wave of coal-fired fired closures sweeps the nation as low natural gas prices make natural gas-fired power increasingly cost-friendly, and federal and state-level environmental legislation looms over the coal-fired sector. Earlier this month, Energy Department Secretary Rick Perry requested that the U.S. Federal Energy Regulatory Commission (FERC) consider ways to intervene in wholesale power markets with measures that financially support for nuclear and coal plants to preserve their financial viability. For information, see October 12, 2017, article - How Will FERC Respond to Wholesale Power Fix Drafted by Energy Department?
A long-term power supply contract between the Sandow plant and Alcoa Corporation's (NYSE:AA) (Pittsburgh, Pennsylvania) aluminum smelter in Rockdale, Texas, was terminated last week, with an effective date of October 1. The smelter has been fully curtailed since 2008. In a press release, Alcoa said, "While the Company [Alcoa] sold surplus electricity since the smelter's curtailment, Alcoa's cost of power under the contract exceeded the related revenue." Alcoa estimates an annual improvement to net income and earnings before interest, tax, depreciation and amortization (EBITDA) of $60 million to $70 million with the termination of the contract, which was set to expire no later than 2038.
The closures of the power plants have a knock-on effect on the mines that supply them with coal. Also closing will be the Three Oaks Mine in Bastrop County, Texas, which supplies the Sandow plant. The mine is owned by Luminant and has been in operation since 2007. The mine produces about 35,000 tons of lignite per year. For more information, see Industrial Info's plant profile.
Also affected will be Peabody Energy Corporation's (St. Louis, Missouri) Rawhide mine in the Power River Basin in northeastern Wyoming. According to the Institute for Energy Economics and Financial Analysis (Cleveland, Ohio), the mine sends approximately 30% of its production to Luminant's Monticello plant. The facility produced approximately 11 million tons of coal in the first six months of this year, sending 3.6 million tons to Monticello. For more information, see Industrial Info's plant profile.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The Monticello and Big Brown plants began operating in the 1970s, while Sandow began operating in 1981. The closures will affect more than 800 employees. For more information, see Industrial Info's plant profiles on the Sandow, Big Brown and Monticello plants. The plants are scheduled to cease operations in January and February next year. Each plant is subject to a 60-day reliability review by the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) to determine if the plants are needed for reliability to the ERCOT grid, which accounts for about 90% of Texas' electric load.
The announcements come as a wave of coal-fired fired closures sweeps the nation as low natural gas prices make natural gas-fired power increasingly cost-friendly, and federal and state-level environmental legislation looms over the coal-fired sector. Earlier this month, Energy Department Secretary Rick Perry requested that the U.S. Federal Energy Regulatory Commission (FERC) consider ways to intervene in wholesale power markets with measures that financially support for nuclear and coal plants to preserve their financial viability. For information, see October 12, 2017, article - How Will FERC Respond to Wholesale Power Fix Drafted by Energy Department?
A long-term power supply contract between the Sandow plant and Alcoa Corporation's (NYSE:AA) (Pittsburgh, Pennsylvania) aluminum smelter in Rockdale, Texas, was terminated last week, with an effective date of October 1. The smelter has been fully curtailed since 2008. In a press release, Alcoa said, "While the Company [Alcoa] sold surplus electricity since the smelter's curtailment, Alcoa's cost of power under the contract exceeded the related revenue." Alcoa estimates an annual improvement to net income and earnings before interest, tax, depreciation and amortization (EBITDA) of $60 million to $70 million with the termination of the contract, which was set to expire no later than 2038.
The closures of the power plants have a knock-on effect on the mines that supply them with coal. Also closing will be the Three Oaks Mine in Bastrop County, Texas, which supplies the Sandow plant. The mine is owned by Luminant and has been in operation since 2007. The mine produces about 35,000 tons of lignite per year. For more information, see Industrial Info's plant profile.
Also affected will be Peabody Energy Corporation's (St. Louis, Missouri) Rawhide mine in the Power River Basin in northeastern Wyoming. According to the Institute for Energy Economics and Financial Analysis (Cleveland, Ohio), the mine sends approximately 30% of its production to Luminant's Monticello plant. The facility produced approximately 11 million tons of coal in the first six months of this year, sending 3.6 million tons to Monticello. For more information, see Industrial Info's plant profile.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
