Progress Energy Carolinas Continues Fleet Modernization, Sets Retirement Dates for Smaller Coal Plants

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Progress Energy Carolinas (Raleigh, North Carolina) was planning on letting some of its old timers retire early. But some of those veterans will get to retire even sooner than originally planned, partly because Progress recently completed its merger with Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina).

The old timers in question are Progress Energy's older, smaller, less-efficient coal-fired power plants in the Carolinas. Following the closing of the Progress-Duke merger in July, and because construction of some replacement generation was ahead of schedule, Progress accelerated the retirement of some of its coal-fired generators.

The coal generators affected include:

• Cape Fear Power Station, a 316-megawatt (MW) power plant located near Moncure, North Carolina. Cape Fear began operating in 1923. Its original retirement date has been moved from June 2013 to October 2012. Retiring this coal-fired plant will not affect three existing oil-fired combustion turbine generators at that site.
• H.F. Lee Power Station Unit 1, originally scheduled to be retired in June 2013, will instead be closed in September 2012. This unit, which began generating electricity in 1951, is located in Goldsboro, North Carolina.

Progress also plans to retire two other older, smaller, less-efficient coal-fired generators:

• H.B. Robinson Power Station Unit 1, a 177-MW unit located near Hartsville, South Carolina, will close this October. The plant began operating in 1960.
• Louis V. Sutton Power Station, a three-unit, 629-MW plant located in Wilmington, North Carolina, will close near the end of 2013. It first went online in 1954.

"These plants, and especially the men and women who have operated and maintained them, have played a vital role in meeting customer energy needs reliably and affordably for decades," said Jeff Lyash, executive vice president of Energy Supply for Duke Energy, in a statement. "As we continue modernizing our generation system, we salute those who have been instrumental in fueling our region's economic growth so dependably."

"We're closing these plants for a combination of reasons," Progress Energy Carolinas spokesman Scott Sutton told Industrial Info. "With coal and gas prices being what they are, these older coal plants get pushed back in the dispatch order. Our natural gas plants are running longer today because of today's gas prices, and that's a dramatic shift. The current economic realities of gas vs. coal are accelerating the trend started by regulation."

Progress Energy Carolinas is also well along in constructing two new natural gas-fired generators, the output of which will more than make up for the closed coal-fired generation. These projects under construction include:

• A 950-MW natural gas, combined-cycle (NGCC) generator, which has a total investment value (TIV) of $925 million, is being built alongside an existing 670-MW, gas- and oil-fired generator at a site in Goldsboro, North Carolina, that will be renamed the H.F. Lee Energy Complex. The company expects to bring this new generator on line next January, ahead of schedule.
• A 625-MW NGCC unit addition under construction in Wilmington, North Carolina, is expected to come online by year-end 2013. That generator, to be built on the site of the to-be-closed Sutton coal plant, has a TIV of $690 million.

North Carolina enacted the Clean Smokestacks Act in 2002 to accelerate the retirement or retrofitting of older coal-fired generators, observed the Progress Energy Carolinas spokesman. In an interview, Sutton said the decision to close the Cape Fear plant was driven by that state law, not federal environmental rules like the Cross-State Air Pollution Rule (CSAPR) from the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). For that reason, the recent federal appeals court ruling overturning CSAPR had no impact on Progress Energy Carolinas decision-making.

Although the Robinson plant, located in South Carolina, was not affected by the North Carolina Clean Smokestacks Act, Sutton noted it would be affected by the federal Clean Air Interstate Rule, which CSAPR was designed to replace, as well as the EPA's Mercury and Air Toxics Standard.

"The cherry on top of all of this is the integration of the Duke Energy and Progress Energy Carolinas generation fleet, which further separates efficient, low-cost gas generation from older, less-efficient coal generation," Sutton said.

The two utilities are moving about 1,000 MW between their respective systems through joint dispatches, capturing efficiencies and contributing to the $650 million in merger-related savings that the companies promised regulators.

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.