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Direct Energy comments about Pennsylvania coal plant closures

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Yesterday, the Pittsburgh Business Times published an article about the latest comments from FirstEnergy’s CEO regarding the upcoming closures of two Pennsylvania coal plants. We posted about those closures on this blog, but I want to take a brief moment and comment about the impact of these closures. Quote is derived from the news article.

Beginning in 2015 with a gradual phase-in, the EPA will begin to implement the Mercury and Air Toxics Standards, or MATS. One of the primary intentions of MATS is to reduce mercury emissions from electricity generation plants that burn coal. Beyond the environmental impact of the rules, the impact on jobs and regional utilities in coal country has been widely discussed. The Pittsburgh Business Times article provides insight into the specific impact of the expected closure of two plants in Southwestern Pennsylvania (Mitchell and Hatfield Ferry Power Stations) by FirstEnergy, the Akron, Ohio-based company that operates through much of the PJM region.

The impact of MATS is very clear in the comments of FirstEnergy CEO Anthony Alexander. “Our analysis considered that together Hatfield and Mitchell represented 10 percent of our total generating capacity but about 30 percent of our estimated cost to comply with MATS regulations”. FirstEnergy could potentially save $275 million in compliance costs by closing the two plants. The fact that FirstEnergy unsuccessfully bid the two plants into the latest PJM capacity auction may have been an attempt to save them, but the results of the auction were apparently not high enough to offset the other costs to continue operations.

This is further confirmation of the changing of the grid that has been caused by a combination of factors including EPA regulations and the rampant growth of shale gas production that has created competition between coal- and gas-fired generation.

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