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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Operators of coal-fired power plants in the Western U.S. are making the same agonizing decisions over the fate of their coal fleets that their brethren east of the Mississippi River have been making for years. And, like asset owners located in the East and Midwest, operators in the West are closing some coal generation and selling some. One state has enacted a law designed to support in-state, coal-fired power and the mines that fuel it.
In Arizona, the fate of the 2,250-megawatt (MW) Navajo Generation Station (NGS) was sealed earlier this year, and the owners are moving to decommission the three-unit plant. The plant's owners, including operator Salt River Project (SRP) (Tempe, Arizona), decided in 2017 to close the plant by the end of 2019 because it could not compete with natural gas-fired generation. But a lengthy campaign by the Navajo Nation and a unit of Peabody Energy (NYSE:BTU) (St. Louis, Missouri), which owns and operates the Kayenta coal mine that provides fuel to NGS, to keep the plant open ended in March. NGS will cease operations by the end of this year, as originally planned. No closure date has been announced for the Kayenta mine, although news reports have said the mine is expected to close this October.
The utilities that co-own NGS, including SRP, Arizona Public Service Company (Phoenix, Arizona), Tucson Electric Power Company (Tucson, Arizona) and NV Energy Incorporated (Las Vegas, Nevada), had been in lengthy negotiations with the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) over plans to lower emissions at NGS, which sits near the Grand Canyon in Northern Arizona. NGS began operating in the 1970s.
Electric utilities in California used to own a portion of the plant, but they were forced to relinquish their respective shares years ago following enactment of state legislation eliminating imports of electricity generated by coal. NV Energy was on that same trajectory.
For a while, it appeared the Trump administration was going to try to force the plant to stay open, using the U.S. Bureau of Reclamation, a branch of the Department of the Interior (DOI) (Washington, D.C.) and a 24% owner of NGS. But those efforts also collapsed.
The owners of NGS plan to replace their lost generation with a combination of gas-fired power, renewable energy, battery-energy storage systems and energy-efficiency programs.
Another Western electric utility, Montana-Dakota Utilities, a unit of MDU Resources Group (NYSE:MDU) (Bismarck, North Dakota), recently announced plans to close three coal-fired units totaling about 144 MW over the next two to three years. The 44-MW Lewis & Clark Power Station in Montana will close by the end of 2020, while two units totaling 100 MW at the R.M. Heskett Power Station in North Dakota will be closed by the end of 2021.
The Lewis & Clark station has been operating since 1958. Unit 1 at the Heskett facility began generating electricity in 1954, while Unit 2 came online in 1963. Montana-Dakota Utilities serves approximately 143,000 electric customers and 275,000 natural gas customers in 262 communities in North Dakota, South Dakota, Montana and Wyoming.
In conducting its integrated resource plan, the utility concluded it made more economic sense to close that coal-fired generation and replace some of it with new gas generation. Low-cost gas, plus the declining cost of windpower, made those resources more economic than continuing to operate the coal units, the company said in a February 19 statement.
The utility plans to add an 88-MW simple-cycle gas-fired peaking plant at its Heskett site, which already has gas-fired generation. Building a second gas-fired unit at Heskett would take advantage of existing gas supply and infrastructure. The utility said the coal-fired units' closure dates could be impacted by a recently concluded bankruptcy proceeding involving the company's coal supplier, Westmoreland Coal Company (OTC: WLBAQ) (Englewood, Colorado).
Elsewhere in the West, Rocky Mountain Power's plan to sell its 116-MW Hardin Generating Station in Montana was approved by the U.S. Federal Energy Regulatory Commission (FERC) (Washington, D.C.).
Rocky Mountain Power (Salt Lake City, Utah) is a unit of PacifiCorp (Portland, Oregon), which is itself a subsidiary of Berkshire Hathaway Incorporated (NYSE:BRK-A) (Omaha, Nebraska). Late last month, PacifiCorp said its analysis, conducted as part of its integrated resource plan, concluded customers would benefit from early closings of about 1,700 MW of coal-fired generation at two power plants in Wyoming. In an earlier study, released last December, the company concluded about 60% of its coal-fired units were uneconomic.
In an April 25 statement, PacifiCorp emphasized that no final decisions have been made about the coal-fired stations in question. But it said customers could potentially benefit if it prematurely retired units 1 and 2 of the Naughton Station in Wyoming and units 1 and 2 of the Jim Bridger Station, also located in Wyoming.
The Bridger units 1 and 2 have combined generating capacity of about 1,156 MW. They began operating in the 1970s. The PacifiCorp statement did not mention Bridger units 3 and 4, which also came online in the 1970s and also have combined generating capacity of 1,156MW.
PacifiCorp's Naughton units 1 and 2 have combined generating capacity of 381 MW. Those units began operating in the 1960s. Earlier this year, PacifiCorp closed Naughton Unit 3, which had generating capacity of 326 MW.
"We continuously examine the costs and benefits of how the company generates electricity to ensure we are making the best decisions for customers," Rick Link, PacifiCorp vice president of resource planning and acquisitions, said in the April 25 statement. "The study reflects the ongoing changing economics for coal driven by market forces."
For purposes of the study, PacifiCorp examined whether customers would benefit if the units are retired as early as 2022 and replaced with other resources. The timing and sequencing of any actual coal unit closures ultimately will be determined by a range of factors that include workforce and community transition considerations, the company said.
The company plans to submit a final plan to its state regulators in August following a stakeholder engagement process where a portfolio of options are presented and discussed.
This spring, Wyoming enacted a law designed to protect in-state, coal-fired power plants. On March 8, Wyoming Governor Mark Gordon signed into law a measure that aims to keep the state's coal-fired power plants operating. The bill, Senate File 159, requires utilities that want to retire a plant in Wyoming to first try to sell it to another company. It also requires the utility to buy back the power from the new coal-fired plant operator, even if cheaper power is available.
Wyoming is the top coal-mining state in the nation, producing nearly 300 million short tons per year. Supporters defended the new law as an attempt to help an important local industry. Critics said keeping coal-fired plants open would hurt customers.
And in New Mexico, efforts are underway to extend the lives of the two remaining operating units at the San Juan Generating Station (SFGS). Public Service Company of New Mexico (PNM) (Albuquerque, New Mexico), a unit of PNM Resources (NYSE:PNM) (Albuquerque, New Mexico), the plant's operator, closed units 2 and 3 at the end of 2017 and said it plans to close units 1 and 4 by the end of 2022.
The shuttered SJGS units 2 and 3 had combined generating capacity of 884 MW. Both units came online in the 1970s. The still-operating units 1 and 4 have combined generating of 894 MW. Unit 1 began operating in 1976 while Unit 4 began generating electricity in 1982.
One of the plant's other co-owners, the city of Farmington, New Mexico, where the plant is located, has found a potential buyer for the still-operating units 1 and 4: Enchant Energy, a unit of a New York-based real estate hedge fund Acme Equities LLC.
Enchant's is investigating the feasibility of installing carbon-capture & sequestration (CCS) technology at units 1 and 4, and then sell the captured carbon dioxide (CO2) to Oil & Gas companies, for use in enhanced oil recovery (EOR) in the Permian Basin in southeastern New Mexico and West Texas.
Enchant has contracted with Sargent & Lundy (Chicago, Illinois) to assess the feasibility of installing a CCS system at the power plant. Results of that study are due later this year. Sargent & Lundy previously had conducted a carbon-capture feasibility study on the San Juan Generating Station for Public Service Company of New Mexico.
Along with PNM, San Juan's other owners - Tucson Electric Power Company, Los Alamos County and Utah Associated Municipal Power Systems - have said they do not plan to receive power from San Juan units 1 and 4 in 2022. Although there are many unknowns, including questions about the cost and effectiveness of CCS, a buyout by the city of Farmington and Enchant Energy, coupled with the installation of a CCS system, could keep units 1 and 4 alive past 2022.
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.
In Arizona, the fate of the 2,250-megawatt (MW) Navajo Generation Station (NGS) was sealed earlier this year, and the owners are moving to decommission the three-unit plant. The plant's owners, including operator Salt River Project (SRP) (Tempe, Arizona), decided in 2017 to close the plant by the end of 2019 because it could not compete with natural gas-fired generation. But a lengthy campaign by the Navajo Nation and a unit of Peabody Energy (NYSE:BTU) (St. Louis, Missouri), which owns and operates the Kayenta coal mine that provides fuel to NGS, to keep the plant open ended in March. NGS will cease operations by the end of this year, as originally planned. No closure date has been announced for the Kayenta mine, although news reports have said the mine is expected to close this October.
The utilities that co-own NGS, including SRP, Arizona Public Service Company (Phoenix, Arizona), Tucson Electric Power Company (Tucson, Arizona) and NV Energy Incorporated (Las Vegas, Nevada), had been in lengthy negotiations with the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) over plans to lower emissions at NGS, which sits near the Grand Canyon in Northern Arizona. NGS began operating in the 1970s.
Electric utilities in California used to own a portion of the plant, but they were forced to relinquish their respective shares years ago following enactment of state legislation eliminating imports of electricity generated by coal. NV Energy was on that same trajectory.
For a while, it appeared the Trump administration was going to try to force the plant to stay open, using the U.S. Bureau of Reclamation, a branch of the Department of the Interior (DOI) (Washington, D.C.) and a 24% owner of NGS. But those efforts also collapsed.
The owners of NGS plan to replace their lost generation with a combination of gas-fired power, renewable energy, battery-energy storage systems and energy-efficiency programs.
Another Western electric utility, Montana-Dakota Utilities, a unit of MDU Resources Group (NYSE:MDU) (Bismarck, North Dakota), recently announced plans to close three coal-fired units totaling about 144 MW over the next two to three years. The 44-MW Lewis & Clark Power Station in Montana will close by the end of 2020, while two units totaling 100 MW at the R.M. Heskett Power Station in North Dakota will be closed by the end of 2021.
The Lewis & Clark station has been operating since 1958. Unit 1 at the Heskett facility began generating electricity in 1954, while Unit 2 came online in 1963. Montana-Dakota Utilities serves approximately 143,000 electric customers and 275,000 natural gas customers in 262 communities in North Dakota, South Dakota, Montana and Wyoming.
In conducting its integrated resource plan, the utility concluded it made more economic sense to close that coal-fired generation and replace some of it with new gas generation. Low-cost gas, plus the declining cost of windpower, made those resources more economic than continuing to operate the coal units, the company said in a February 19 statement.
The utility plans to add an 88-MW simple-cycle gas-fired peaking plant at its Heskett site, which already has gas-fired generation. Building a second gas-fired unit at Heskett would take advantage of existing gas supply and infrastructure. The utility said the coal-fired units' closure dates could be impacted by a recently concluded bankruptcy proceeding involving the company's coal supplier, Westmoreland Coal Company (OTC: WLBAQ) (Englewood, Colorado).
Elsewhere in the West, Rocky Mountain Power's plan to sell its 116-MW Hardin Generating Station in Montana was approved by the U.S. Federal Energy Regulatory Commission (FERC) (Washington, D.C.).
Rocky Mountain Power (Salt Lake City, Utah) is a unit of PacifiCorp (Portland, Oregon), which is itself a subsidiary of Berkshire Hathaway Incorporated (NYSE:BRK-A) (Omaha, Nebraska). Late last month, PacifiCorp said its analysis, conducted as part of its integrated resource plan, concluded customers would benefit from early closings of about 1,700 MW of coal-fired generation at two power plants in Wyoming. In an earlier study, released last December, the company concluded about 60% of its coal-fired units were uneconomic.
In an April 25 statement, PacifiCorp emphasized that no final decisions have been made about the coal-fired stations in question. But it said customers could potentially benefit if it prematurely retired units 1 and 2 of the Naughton Station in Wyoming and units 1 and 2 of the Jim Bridger Station, also located in Wyoming.
The Bridger units 1 and 2 have combined generating capacity of about 1,156 MW. They began operating in the 1970s. The PacifiCorp statement did not mention Bridger units 3 and 4, which also came online in the 1970s and also have combined generating capacity of 1,156MW.
PacifiCorp's Naughton units 1 and 2 have combined generating capacity of 381 MW. Those units began operating in the 1960s. Earlier this year, PacifiCorp closed Naughton Unit 3, which had generating capacity of 326 MW.
"We continuously examine the costs and benefits of how the company generates electricity to ensure we are making the best decisions for customers," Rick Link, PacifiCorp vice president of resource planning and acquisitions, said in the April 25 statement. "The study reflects the ongoing changing economics for coal driven by market forces."
For purposes of the study, PacifiCorp examined whether customers would benefit if the units are retired as early as 2022 and replaced with other resources. The timing and sequencing of any actual coal unit closures ultimately will be determined by a range of factors that include workforce and community transition considerations, the company said.
The company plans to submit a final plan to its state regulators in August following a stakeholder engagement process where a portfolio of options are presented and discussed.
This spring, Wyoming enacted a law designed to protect in-state, coal-fired power plants. On March 8, Wyoming Governor Mark Gordon signed into law a measure that aims to keep the state's coal-fired power plants operating. The bill, Senate File 159, requires utilities that want to retire a plant in Wyoming to first try to sell it to another company. It also requires the utility to buy back the power from the new coal-fired plant operator, even if cheaper power is available.
Wyoming is the top coal-mining state in the nation, producing nearly 300 million short tons per year. Supporters defended the new law as an attempt to help an important local industry. Critics said keeping coal-fired plants open would hurt customers.
And in New Mexico, efforts are underway to extend the lives of the two remaining operating units at the San Juan Generating Station (SFGS). Public Service Company of New Mexico (PNM) (Albuquerque, New Mexico), a unit of PNM Resources (NYSE:PNM) (Albuquerque, New Mexico), the plant's operator, closed units 2 and 3 at the end of 2017 and said it plans to close units 1 and 4 by the end of 2022.
The shuttered SJGS units 2 and 3 had combined generating capacity of 884 MW. Both units came online in the 1970s. The still-operating units 1 and 4 have combined generating of 894 MW. Unit 1 began operating in 1976 while Unit 4 began generating electricity in 1982.
One of the plant's other co-owners, the city of Farmington, New Mexico, where the plant is located, has found a potential buyer for the still-operating units 1 and 4: Enchant Energy, a unit of a New York-based real estate hedge fund Acme Equities LLC.
Enchant's is investigating the feasibility of installing carbon-capture & sequestration (CCS) technology at units 1 and 4, and then sell the captured carbon dioxide (CO2) to Oil & Gas companies, for use in enhanced oil recovery (EOR) in the Permian Basin in southeastern New Mexico and West Texas.
Enchant has contracted with Sargent & Lundy (Chicago, Illinois) to assess the feasibility of installing a CCS system at the power plant. Results of that study are due later this year. Sargent & Lundy previously had conducted a carbon-capture feasibility study on the San Juan Generating Station for Public Service Company of New Mexico.
Along with PNM, San Juan's other owners - Tucson Electric Power Company, Los Alamos County and Utah Associated Municipal Power Systems - have said they do not plan to receive power from San Juan units 1 and 4 in 2022. Although there are many unknowns, including questions about the cost and effectiveness of CCS, a buyout by the city of Farmington and Enchant Energy, coupled with the installation of a CCS system, could keep units 1 and 4 alive past 2022.
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.
