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Coal plant operators stick to closure plans despite Trump's changes to CO2 rules


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Coal plant operators stick to closure plans despite Trump's changes to CO2 rules

Power plant owners with plans to retire the most coal-fired capacity in the next several years said they would not change course based on the Trump administration's scaled-back replacement of the Obama-era Clean Power Plan.

The Affordable Clean Energy, or ACE, rule was finalized June 19 and uses a narrower interpretation of the agency's authority to regulate carbon dioxide emissions. Still, several plant operators with scheduled retirements of their coal-fired facilities have either publicly indicated or told S&P Global Market Intelligence that those plans have not changed.

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Despite President Donald Trump's campaign promises to revive the U.S. coal sector, domestic power producers have retired coal capacity at a fairly steady pace since 2014, even as the Clean Power Plan was stayed by the U.S. Supreme Court and later replaced completely. Moody's said that despite the rule requiring minimal investment from coal plant operators to comply, ACE would "not materially slow the nationwide transition away from coal due to the current low natural gas price environment," an assessment that was shared by Fitch Ratings.

"The new rule may result in a slower decline in coal-fired generation; however, it will not change the dynamics that have driven dramatic increases in both natural-gas fired and renewable generation," Fitch Ratings wrote in a June email.

While the largest amount of retirements in the last few years occurred in 2015 when 15.1 GW of coal-fired capacity went offline, the second-highest year for coal plant retirements was 2018, when 13.5 GW was taken offline. Another 9.7 GW is scheduled to retire in 2019.

"Our plans have not changed and will not change," DTE Energy Co. spokesperson Randi Berris said. The company filed an integrated resource plan with the Michigan Public Service Commission that commits to cutting carbon emissions by 50% by 2030 and by 80% by 2040. DTE plans to shutter 14 of its 18 coal-fired power plants by 2030.

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FirstEnergy Solutions Corp. said there is "no change to the current shutdown timeline" of its coal plants following the rollout of the rule. The bankrupt power provider shut down 1,660 MW of coal capacity at its Bruce Mansfield plant in Beaver County, Pa., in February as part of more than 4,000 MW of coal and oil capacity it plans to retire because of unfavorable market conditions.

Salt River Project spokesperson Scott Harrelson wrote that the decision to close the 2,250-MW Navajo power plant in Arizona was made based on economics, and "that is still the case."

NiSource Inc. said it is reviewing the ACE rule but does not expect any changes to its plan to retire all remaining coal-fired units by 2028. NiSource subsidiary Northern Indiana Public Service Co. will shut down the 1,625-MW R.M. Schahfer coal plant in 2023 and the 469-MW Michigan City coal plant in 2028.

"They are just approaching end of life," NiSource President and CEO Joseph Hamrock said in an April interview.

Just days after the ACE rule was finalized, the Tennessee Valley Authority released an integrated resource plan that recommends further retirements of coal-fired power plants such as its 1,017-MW Paradise coal-fired plant, despite the president specifically advocating for keeping the TVA's plants open.

"Coal is an important part of our electricity generation mix and [the TVA] should give serious consideration to all factors before voting to close viable power plants, like [the Paradise plant] in Kentucky," Trump tweeted Feb. 11.

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IDACORP Inc. subsidiary Idaho Power Co. plans to exit its stake in three coal-fired power plants, including the 2,111-MW Jim Bridger plant in Wyoming, as the utility transitions to 100% clean energy by 2045. In its 2019 integrated resource plan, Idaho Power said its preferred portfolio calls for shedding 1,026 MW of coal while adding natural gas, solar and battery storage.

"Guidance from the 2019 IRP indicates favorable economics associated with Idaho Power's exit from five of seven coal-fired generating units by the end of 2026, leaving only two units at the Jim Bridger facility operating into the 2030s," the company said in its resource plan. "Idaho Power views this guidance as consistent with its long-term clean energy goals and expressed transition from coal-fired generation."

While the economics of natural gas and renewable energy compared to coal are driving much of the shift, Duke Energy Corp. spells out that part of the issue is growing public concern about climate change. Duke Energy Indiana LLC's integrated resource plan moves up the planned retirement of more than 4,100 MW of coal capacity by shutting down its Cayuga and Gibson plants by 2038.

"Carbon regulation is more a matter of if, than when, and warrants consideration in the plan," Duke Energy Indiana wrote. "Given the magnitude of the change that would be driven by substantive carbon regulation, a measured transition towards a less carbon-intensive future is prudent."

WEC Energy Group Inc. has retired 1,800 MW of coal generation since 2018 and said in a May filing that it plans to continue to work with stakeholders to reduce carbon dioxide emissions by about 40% below 2005 levels by 2030 and by 80% below by 2050. American Electric Power Co. Inc. is targeting an 80% reduction in carbon dioxide emissions from 2000 levels by 2050 based on "economics, customer demand, grid reliability and resiliency, regulations and the company's current business strategy."

On July 1, PNM Resources Inc. unveiled its plans to retire the San Juan power plant by July 2022 and transition away from coal, a move Moody's deemed credit positive because it reduces the company's carbon transition risk and improves community relations as the company works toward meeting New Mexico's clean energy goals.

NextEra Energy Partners Executive Vice President and CFO Rebecca Kujawa said that even in a "post-incentive market," new wind and solar generating resources are increasingly more appealing to existing coal and nuclear generation.

"We're going to keep building whatever our customers want, but a lot of wind and a lot of solar because both are going to be compelling forms of generation and better economics compared to the coal and nuclear facilities they're operating today," Kujawa said.

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