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Trump's support for coal power did not slow down 2017 retirement announcements

President Donald Trump's pledges to help the coal industry did not stop operators of coal-fired power plants from shutting down units in 2017, according to S&P Global Market Intelligence data.

The coal sector showed signs of recovery in 2017, with mining companies logging improved financial performances and employment increasing. Production was generally higher in 2017 than the year before, but still less than earlier in the decade.

But the bad news continued for the coal-fired power industry, which announced the future shutdown of 16,320 MW of capacity, with two-thirds of that total to be shut this year alone.

Steve Piper, director of energy research at S&P Global Market Intelligence, said in a November 2017 report that 2018 could look like 2015, the end of a three-year period during which about 45,000 MW of coal-fired capacity were retired. Troubling economics have proven difficult to overcome, with low wholesale power and natural gas prices being the main contributing factors squeezing margins. With the Federal Energy Regulatory Commission's rejection of a notice of proposed rulemaking initiated last fall by the U.S. Department of Energy and intended to compensate resources such as coal-fired and nuclear plants that can store an extended supply of fuel onsite for reliability purposes, many power plant operators will likely continue on their various paths of transformation.

Coupling this unfavorable operating environment with an increasingly gas-, wind- and solar-focused resource mix going into the future will likely only continue to lower the need for an aging coal fleet.

The retirement announcements made in 2017 hit coal plants across the country and came from various types of utilities. Most of the plants identified for retirement are in states where the majority of voters selected Trump in the 2016 presidential election, though many of the states in which Democratic candidate Hillary Clinton won, such as California, New York and the New England states, have little or no remaining coal-fired generating capacity.

The current average weighted age for these units slated for retirement is 41 years, making them a decade younger than the average retirement age of coal units since the year 2000.

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One of the more notable of the 2017 retirement announcements came in October, when Texas utility Vistra Energy Corp. in two separate announcements said it would retire four units with a combined capacity of nearly 4,400 MW. The Monticello ST plant received its coal from a mine in Wyoming, but both the Big Brown and Sandow plants received their coal from mines next to the plant, which typically helps keep costs down. The Sandow plant consists of Unit 4 and Unit 5. Monticello and the Sandow units shut down in early January, and Big Brown is scheduled to shut in February.

In Florida, the 1,276-MW St. Johns River Power plant shut down in early January. Its primary owner, city of Jacksonville-owned utility JEA, decided in March 2017 to close the plant, mainly due to market conditions and a long-term decline in peak load. The utility will replace the coal plant's output with nuclear, gas and solar resources. NextEra Energy Inc. utility subsidiary Florida Power & Light Co. owned at 20% interest in the St. Johns River plant.

WEC Energy Group Inc. in November 2017 said its 1,234-MW Pleasant Prairie power plant in Wisconsin would be retired by the second quarter of 2018, due to a combination of flat power demand, low natural gas prices and reduced costs for renewables. The plant is owned by utility affiliate WE Energies, known legally as Wisconsin Electric Power Co.

Even in the heart of coal country, utilities decided to close plants. City-owned Owensboro Municipal Utilities in Kentucky said in March 2017 it would close its two-unit Elmer Smith plant, one unit in 2019 and the other in 2023, due to economics. Also in Kentucky, PPL Corp. subsidiary Kentucky Utilities Co. said in November 2017 it would retire two older units, one already 60 years old, at its E.W. Brown plant in early 2019, saying the plant is already expensive to operate and that pending environmental regulations would further increase the plant's operating costs.

Some other retirement decisions were made in the context of a utility's long-term resource planning. Xcel Energy Inc., for example, said in August 2017 that it would retire two units at its Comanche power plant in Colorado, though not until 2025, while also adding 2,400 MW of gas-fired and renewable resources. IDACORP Inc. subsidiary Idaho Power Co. in an integrated resource plan filed with Idaho regulators June 30 outlined a plan to close coal-fired units it owns with other regional utilities, though the last unit would not be shut down until 2032.

On a regional level, announced retirements were not concentrated in any one place. The largest amount was in areas outside of an ISO, with 5,631 MW. The Electric Reliability Council of Texas region saw the second-largest amount of capacity announced for retirement, all due to Vistra Energy. The Midcontinent ISO saw 2,958 MW announced for retirement and the PJM Interconnection saw 2,424 MW, all of which is expected to be shut down this year.

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