The U.S. Environmental Protection Agency’s 2019 decision to rescind the Obama-era Clean Power Plan that reduced carbon dioxide emissions 32% by 2030 has led to a legislative push in some states to promote keeping coal-fired plants on line, an industry analyst says.
The vacuum on the federal level to take action on climate change or promote transition to clean energy, and President Donald Trump’s support of coal, also has emboldened states to take action to protect coal-fired plants, Ben Inskeep, an analyst with EQ Research told ENR.
Indiana legislators have introduced a bill that would reward utilities that keep coal-fired plants operating and limit their retirements, which, if passed, would make the state the third to restrict utility actions related to their generation resources.
The Indiana bill was prompted by the North Indiana Public Service Co. decision in 2018 to save $4 billion by retiring its fleet of coal units by 2028, a strategy driven by economics and not by environmental concerns, the utility said, also issuing a request for proposals for 2,300 MW of solar energy.
With U.S. coal plants aging and utilities questioning whether to invest in environmental controls, a number have decided “it’s not cost effective,” Inskeep says.
Advance Notice Required
The Indiana House of Representatives amended the bill on Jan. 30 but has not yet passed it. The legislative session ends early this year in mid-March, and the bill is considered “a trojan horse” to get something in place until an energy policy task force makes recommendations in December before a broader bill can be debated in a longer 2021 legislative session, says Inskeep.
“This bill is by no means the final word,” he says. While the bill does not specifically address coal-fired plants, industry analysts say it is written in such a way as to only affect that type of power generation.
Utilities must give state regulators six months of advance notice if they plan to retire or sell a generation unit of 80 MW or more and did not include such intentions in their integrated resource plans.
The Utility Regulatory Commission must determine that the retirement or sale is in the public interest.
The bill prohibits a utility from terminating a power purchase agreement with a generating plant it owns in part unless it provides three years notice to regulators, but it also allows the utility to recover the costs of the purchased power and the cost of stockpiling 90 days of coal, up from the existing 45 days, which would benefit coal miners in the state.
Other States Join In
Meanwhile, the Wyoming legislature is considering building on a law signed last March by Gov. Mark Gordon (R) that requires utilities to seek a buyer before decommissioning a coal-fired power plant.
The proposal now before lawmakers would allow the new buyer to sell power directly to retail customers who take power at the transmission level, usually large industrials. It also would allow the coal-fired plants to offer unbundled transmission service to any retail customer.
The Public Service Commission said it is unlikely for a coal fired plant to be offered for sale and sold to a non-utility before 2023.
Rocky Mountain Power plans to shut down four coal-fired units in Wyoming beginning in 2023 and Gov. Gordon wants the PSC to investigate the utility’s decision making and how it reached its conclusions. The utility’s parent, Portland, Ore.-based PacifiCorp, last October said it would close 83% of its coal fleet by 2038 as it transitions to renewable resources. It is planning a 400-mile transmission line to deliver renewables to Utah and Wyoming.
Ohio’s law signed in July by Republican Gov. Mike DeWine provides about $60 million a year in subsidies through 2030 to support two Ohio Valley Electric Corp. coal plants, one located in Ohio and another in Indiana.
The law also gives subsidies to two nuclear plants, will cut the state’s renewable energy standard to 8.5% and phases out the state’s energy efficiency standard.