Efforts to save the 1,300-MW Pleasants power plant in West Virginia are yet another "red flag" for the economics of coal-fired generation, according to the Institute for Energy Economics and Financial Analysis.
Omnis Fuel Technologies LLC has emerged as the latest potential suitor to purchase the coal-fired power plant in Pleasants County. The plant has reportedly been "mothballed" and sitting idle since June 1 as state officials and energy companies work to save it from retirement.
"As the rescue effort continues to play out, red flags that warn of coal power's high cost to ratepayers — and unprofitability for plant owners — have been multiplying across the region," Institute for Energy Economics and Financial Analysis (IEEFA) analyst Seth Feaster wrote in a June 13 report.
Omnis signed a letter of intent with Energy Transition and Environmental Management LLC, a Houston-headquartered demolition company, and Energy Harbor Corp. Omnis intends to use the plant to "generate energy using the hydrogen byproduct of Omnis's graphite production operations," according to filings with the Public Service Commission of West Virginia. (PSC docket 22-0793-E-ENEC)
Former FirstEnergy affiliate Energy Harbor in December 2022 transferred the Pleasants plant to Energy Transition and Environmental Management for potential demolition and site remediation but leased it back through May 31. It has not generated electricity since the lease ended.
"If the deal happens, it is not known what timeline Omnis has for bringing the plant back into operation, or whether it would even continue to use coal," Feaster wrote.
Jay Powell, president of the Pleasants County Commission in West Virginia, recently told S&P Global Commodity Insights that his understanding is the plant could return to service as soon as Aug. 1 if a deal is reached.
FirstEnergy Corp. utility subsidiaries Monongahela Power Co., known as Mon Power, and The Potomac Edison Co. also are weighing the purchase of the Pleasants plant.
Mon Power and Potomac Edison have asked to impose a temporary surcharge on customers of $3 million per month while they evaluate the potential acquisition of the Pleasants plant.
Feaster warned in a late April report that the effort to save the 43-year-old Pleasants plant "collides with economic reality."
"Whatever the final outcome, one thing is clear: West Virginia's scattershot approach and lack of any clear plan or commitment to save Pleasants hasn't benefited anyone," Feaster wrote in the June 13 analysis.
The potential higher costs for ratepayers, lack of clarity on whether the plant will burn coal again, and lost tax dollars add up to an uncertain economic future for Pleasants County and the state, Feaster wrote.
Other 'red flags'
The IEEFA also pointed out that Potomac Edison is seeking approval from Maryland regulators for the early termination of its power purchase agreement with AES Corp.'s 180-MW Warrior Run coal-fired power plant. Buying out the contract approximately seven years early will save customers nearly $80 million, Potomac Edison said.
"The $80 million in savings is eye-opening because the 180-MW plant ... is 20 years newer than Pleasants, having opened in 2000," Feaster wrote. The analyst also noted that Warrior Run is only about an "hour-and-a-half drive away" from Mon Power's 1,098-MW Fort Martin coal-fired power plant.
The Consumer Advocate Division of the West Virginia PSC previously recommended that the Pleasants plant could replace other resources, such as the older Fort Martin coal plant.
The IEEFA also highlighted the recent closure of the 1,490-MW W.H. Sammis coal plant in Ohio and planned retirement of the 1,915-MW Homer City coal plant in Pennsylvania as further evidence of the economic pressures facing the fossil fuel resource.
An April 3 study from the IEEFA found that the US is on track to close half of its coal-fired power plants by 2026, based on current announcements from utilities. About 58 GW of US coal plant capacity is projected for retirement by 2030 with the Inflation Reduction Act accelerating the trend, according to S&P Global Market Intelligence data.
"Many of the gas plants these coal-fired facilities are competing with are newer and more efficient," Feaster wrote. "West Virginia and Pennsylvania are also both big producers of gas from fracking, and the low cost of that fuel is a key competitive factor pushing the coal plants out of the market."
In Kentucky, PPL Corp.'s utility subsidiaries in May filed a request to shut down seven fossil-fired units to comply with a new state law that requires utilities to receive regulatory approval before retiring any fossil-fired generation. PPL executives said the law, designed to slow coal plant retirements, would not dissuade the utilities from pursuing their generation replacement plans.
"We believe investing hundreds of millions of dollars in environmental controls to continue operating aging, uneconomic coal plants is not in our customers' best interest," PPL President and CEO Vincent Sorgi said May 4 on the company's first-quarter earnings call.
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