By continuing to use this site, you agree to our use of cookies.


In Japan? You can go to Argus Japan


Coal retirements have not slowed under Trump

3 Nov 2017, 10.10 pm GMT

Coal retirements have not slowed under Trump

Washington, 3 November (Argus) — President Donald Trump's pro-coal policies have failed to slow the pace of coal plant retirements in the US.

Since Trump took office in January, US power producers have announced plans to shut down coal units representing 10,530MW in nameplate capacity across 15 plants in the US.

This is on par with all of 2016, when generators declared plans to close 21 plants representing 10,613MW in load. The [peak] of retirement announcements occurred in 2015, as utilities scrambled to meet the original original compliance dedline for the Environmental Protection Agency's (EPA) mercury and air toxics standards. That year, utilities set plans to mothball 17,253MW of capacity at 75 plants across the US.

This pace of announcements has not let up because executives in the power sector "pay more attention to long-term gas prices than they would on sort of regulatory pendulums swinging back and forth, and in part because those pendulums do not necessarily swing that quickly through the Administrative Procedures Act and all of that stickiness in the process," said Marc Chupka, principal at the Brattle Group, an economic research firm that has done work on the coal industry.

Trump's administration has initiated a number of regulatory rollbacks over the past nine months meant to aid coal generators, including plans to rescind the Clean Power Plan as well as wastewater emissions restrictions on steam power plants. Energy Secretary Rick Perry has proposed that the US Federal Energy Regulatory Commission subsidize power plants with 90 days of on-site fuel supply to compensate the "grid resiliency" benefits they provide.

But most major utilities are "sticking to their original plans regardless of the change in administration and some of the proposed policies that are floating out there right now," said an analyst at a major US coal producer. "That is disappointing."

Trump's use of coal miners "as the backdrop to his press conferences" is a "cynical" move preventing mining regions from planning for a different future, argued Bruce Nilles, director of Sierra Club's Beyond Coal Campaign. The Clean Power Plan "has already done 80pc of what it needs to do."

Utilities made long-term plans in order to comply with the regulation, and they are not changing course.

"A lot of the people in industry are also looking beyond the current administration," Chupka said. "Utility planning, at least in the electricity industry, is fairly long-term. It is based on a long-term market outlook and regulatory trends."

Major announcements this year have come from utilities like Vistra Energy subsidiary Luminant, which last month said it would retire three plants including the 1,800MW Monticello facility by February. This decision came despite a recent legal win for the Texas utility, which delayed the potential installation of scrubbers at the plants.

Last year, Luminant's retiring facilities collectively took 6.55mn short tons (5.94mn metric tonnes) of coal from Peabody Energy's Rawhide mine in the Powder River basin, according to US Energy Information Administration (EIA) fuel receipts data.

But Peabody chief financial officer Amy Schwetz downplayed the impact of individual closures last week, saying Peabody's business plan has already accounted for an expected 50GW of coal retirements in the US over the next five years.

"In the grand scheme of things, no one contract, no one customer, no one state is necessarily material to that mix," Schwetz said on 25 October.

Peabody chief executive Glenn Kellow earlier this year called for a moratorium on power plant retirements to give more time to analyze grid reliability. And coal producers are among the proponents of Perry's sweeping "grid resilience" proposal, which has attracted opposition from power generators, environmental groups and various industry associations.

Brattle's Chupka said the proposal might "preserve some coal plants that otherwise might retire," but at a potential cost of $4bn-$11bn/yr.

Even utilities with significant coal portfolios criticized the move. Dynegy, which generates 35pc of its power from coal, said the initiative would "potentially represent a death blow to the competitive markets."

FERC is accepting rebuttal comments on the plan through 7 November. There are a number of options the commission could take after it reviews the comments, including not taking any action.

Whether or not the FERC rule goes through, US coal producers may still be challenged by continuing retirements.


View more news articles

Share this page

Contact Us

Request a callback

I agree to the Argus privacy policy