High Natural Gas Prices Force Pennsylvania Power Plant Offline

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Researched by Industrial Info Resources (Sugar Land, Texas)--The 842-megawatt (MW) Hunterstown Power Station in Gettysburg, Pennsylvania, owned and operated by Reliant Energy (NYSE:RRI) (Houston), went offline on May 13, 2008, citing that the prices the plant was paying for natural gas were not yielding an equitable return on expenditures. However, the facility was scheduled to return to service Thursday, but only if its pricing index equated to profitable operation.

Unfortunately, there is a much bigger issue at hand in the realization of why such a plant would temporarily halt normal operations, and that problem is the lack of resources to gain access to our domestic natural gas reserves. As a result, the lack of supply is causing prices to spike; nearly $13 per 1 million British thermal units (MMBTU) for Hunterstown on May 13. A BTU is described as the amount of heat required to raise the temperature of one pound of water one degree Fahrenheit. Simply put, if supply cannot keep up with demand for natural gas, prices will continue to rise, and that doesn't bode well for the short-term as energy consumption and the need for natural gas will not be falling with summer approaching.

Another drawback is that a vast amount of coal will have to be utilized to make up for the lack of power from this and other similarly cleaner-operating power facilities. Hunterstown, which comprises three 184 MW combustion turbine/heat recovery steam generators and one 290 MW steam turbine (totaling 842 MW and generating enough power for more than 500,000 Pennsylvania homes), was partially developed to be a cleaner-emissions alternative than Pennsylvania's numerous coal-burning power plants. Consequently, high natural gas prices are making the return to greater coal consumption the only realistic alternative at this time.

It is unclear when the infrastructure throughout America will expand to cope with our natural gas needs, thus providing one of the much-needed alternatives to foreign oil we have at our disposal. Nuclear power seems to be nearing a renaissance, but the building of those types of power plants is years away. All in all, coal has been and will continue to be the cheapest short-term alternative to the ever-growing energy shortage the U.S. is facing. Moreover, if we can't learn from the type of situation in which a half-billion-dollar power facility (in perfect working condition) sits idle while old-fashioned coal plants are burning trainloads of coal every day, we won't be any closer to a cleaner and more energy-conscious alternative than we were 30 years ago during America's last energy "crisis."

Reliant Energy brought the three-in-one combined-cycle generating unit online in 2002. Reliant Energy provides electricity and energy-related products to more than 1.9 million customers in Texas, Pennsylvania, New Jersey and Maryland. The company is one of the largest independent power producers in the nation, totaling about 16,000 MW of power generation available to its consumers. Reliant had a market capitalization of about $9 billion as of September 11, 2007.

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