Coal-Fired Plants, Jobs Become Extinct as Regulation and Other Costs Mount

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Researched by Industrial Info Resources (Sugar Land, Texas)--Jobs in the U.S. power plant industry are changing again as more coal-fired power plants close due to age, costly emission equipment requirements, and the inability to obtain capacity payment contracts from their regional transmission organization. In years past, coal-fired power plants were some of the least costly electricity generators, but in the last few years, because of federal regulations, these plants have been required by state and federal environmental quality departments to install expensive equipment in order to comply with new environmental regulations. Coal-fired power plant owners, in order to bid in the capacity auctions, must now factor in the cost of compliance, which means that they will no longer be the least expensive source of power and may mean they will no longer be in business.

The implications are that power prices are going up for consumers in future years by a factor of eight or more, and low-cost coal-fired plants will continue to close, with those high-paying jobs disappearing as well.

A recent example is grid operator PJM Interconnection's (Valley Forge, Pennsylvania) region, which encompasses 13 states, including Ohio, Pennsylvania, Tennessee and New Jersey, as well as the District of Columbia. In June 2012, PJM said its customers will pay $16 per megawatt-day, based on capacity auction held three years ago; however, in 2014 the costs for an average utility bill will rise by $126, and in 2015, as a result of the latest auction, the cost will be $136 more per year. In Ohio, the average bill will jump to $357 because of lower-cost plants closing in that area and fewer lower-cost alternatives.

The Fisk and Crawford Power Plants in Chicago, Illinois, both owned by Midwest Generation (Chicago), are scheduled to shutter and lay off 170 International Brotherhood of Electrical Workers union employees, as well as the State Line Power Plant in Hammond, Indiana, which has closed and laid off 100 members of the United Steelworker's Union as a result. GenOn (NYSE:GEN) (Houston, Texas) also announced the closing of seven power plants in Ohio and Pennsylvania, which will add several hundred workers to the unemployment lines. Midwest Generation also said that it may shutter four additional coal-fired power plants in Illinois because of costly emission requirements, which could mean 1,000 more jobs gone, about 700 of these union positions, and putting employee benefits and pensions at risk, according to a report by Crain's Chicago Business.

These job losses will have a ripple effect on their respective communities, school districts, real estate foreclosure rates, and local businesses that are dependent upon commerce and the associated uptick in the unemployment rate locally and nationally.

As coal plants close additional losses occur with the closing of coal mines, Arch Coal (NYSE:ACI) (Saint Louis, Missouri) recently closed three coal mines in Kentucky and additional mines idled with a loss of 750 employees which devastated the local towns and businesses that depended upon the miners.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.