Washington, 4 September (Argus) — Luminant plans to idle two units at its 1,920MW Monticello coal-fired plant because low electricity prices have made them uneconomical to operate.
The company submitted plans with the Electric Reliability Council of Texas (ERCOT) on 31 August that would allow it to idle Monticello units 1 and 2, both rated at 580MW, until June 2013 when peak summer prices are expected to rebound. The 790MW unit 3 will remain operational year-round.
The decision is purely based on economics as weak power prices and cheap natural gas have “significantly challenged” Luminant's lignite-fired units, a company spokesman said. Power prices for October 2012 through May 2013 are projected to be about 20pc lower than they were last September, the spokesman said.
Peak day-ahead power prices at ERCOT's Houston trading hub ranged from $29.25-$66.25/MWh with an average of $40.52/MWh over the past month, Argus data show.
Luminant said last year it would idle the two units from 1 January to achieve emissions reductions targets set under the Cross-State Air Pollution Rule, which was struck down by a federal appellate court on 21 August. The company kept the units online after the court imposed a temporary stay of the cross-state rule in late December while the lawsuit ran its course.
Luminant had previously said it would only idle the Monticello units if the cross-state rule was not stayed or significantly revised. The generator was one of many industry petitioners that filed motions for a stay "because of the irreparable harm it would cause” to the company, Luminant said in court filings.
But the recent court victory and less burdensome regulatory environment have not helped the 38-year old Monticello plant overcome other unfavorable market conditions. Units 1 and 2 have been operating at low capacity this year, generating just under 1.6GWh through the first half of 2012 compared to nearly 4GWh during the same period in 2011, according to data from the Environmental Protection Agency's Acid Rain Program.
The operation of Monticello unit 3 has also been curtailed this year, with generation falling from 2.8GWh during the first half of 2011 to just over 1GWh this year.
Idling the units will reduce emissions of SO2, NOx and other criteria pollutants, but could put pressure on the Texas grid if demand surges in the coming months. ERCOT expressed concerns about maintaining reserve capacity margins when the units were expected to be taken out of service in a 10-year outlook issued last December.
Monticello's year-to-date emissions for SO2 and NOx stand at 12,284 short tons and 1,987st, respectively, 57pc and 59pc lower than totals from the first half of 2011.
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