A West Virginia-based coal plant operator has announced that it’s filing for bankruptcy due to weak demand for electricity. Longview Power LLC, which operates one of the newest and most efficient coal-fired power plants in the U.S. hailed by the Trump administration as a model for coal’s future, announced in a Tuesday press release that it would seek to restructure its debts and ownership structure under the Chapter 11 bankruptcy process.
The company cited low power demand, driven by a mild winter, cheap natural gas prices and the COVID-19 global pandemic.
“This filing is unfortunate but necessary given the current depressed power prices, which have further dropped more recently due to the terrible COVID-19 pandemic sweeping the nation and dramatic effects of the pandemic on the economy,” said Longview CEO Jeff Keffer.
Longview operates a 700-megawatt coal-fired power plant near Morgantown. The plant has been championed by federal officials, including former Energy Secretary Rick Perry, who visited the plant in 2017.
“This plant — and I won’t say plants like it, because there’s not a lot like it — is incredibly important to the future of this country,” Perry said, during the tour.
The company says operations will continue during the bankruptcy.
In an interview last fall, Keffer was optimistic about Longview’s ability as a younger coal plant to weather the larger sector-wide coal downturn.
“We’re able to produce electricity more efficiently than any other coal plant in our region, the PJM region,” he said. “We’re able to do it at lower costs than just about any other fossil fuel that includes gas-fired plants.”
But that was before the coronavirus pandemic shuttered large swaths of the U.S. economy, which included lowering demand for electricity.
The filing does not affect a 1,200 megawatt natural gas plant and 70 megawatt solar farm Longview proposed in 2019. The two power generators will be constructed adjacent to the coal facility and were recently approved by state regulators.
A new study finds the closure of coal-fired power plants and transition to natural gas generation across the United States over a decade saved an estimated 26,610 lives due to a reduction in air pollution, with about a fifth of those avoided deaths in the Ohio Valley.
The coal-rich Ohio Valley states received outsized health benefits from the shift from coal to gas. The analysis found about 5,300 deaths were avoided in West Virginia, Kentucky and Ohio.
The study, published Monday in the Journal Nature Sustainability, examined the impact of the closure of 334 coal-fired units between 2005 and 2016. During that same time period, 612 new natural-gas-fired units were brought online.
The analysis found that when coal plants closed, air pollution including particulate matter, ozone and other toxic substances decreased in nearby communities, reducing deaths from respiratory diseases, stroke and heart disease.
“We see that on average, across the country, the mortality rate, the number of people dying in a given population size goes down by about one percent when a unit shuts down,” said Jennifer Burney, an associate professor at the University of California San Diego’s School of Global Policy and Strategy and author of the study.
For decades, coal produced and burned in the Ohio Valley played an outsized role for much of the United States.The decline of coal has profoundly changed many communities as employment in the mining and coal generation sectors declined, but Burney said her research shows coal’s decline also has tangible benefits in lives saved.
“It’s really interesting that this is also where you see these really high beneficial impacts,” she said. “People have not died that might have if those plants have been kept on.”
The study also found the closure of coal plants benefited the country’s agricultural sector. Less air pollution allowed more sunlight to reach the earth’s surface, which the analysis extrapolates resulted in saving an estimated 570 million bushels of corn, soybeans and wheat grown near closed coal-fired generators.
In addition, Burney’s analysis estimated air pollution from coal plants also masked some of the warming in the atmosphere.
“It’s like taking off your hat in the sun. You feel the full heat that’s there and that’s what’s happening right now as the air is getting cleaner,” she said. “We’re now seeing the full extent of warming that’s already present, but had been kind of hidden from us by pollution.”
While the public health benefits of decommissioning coal plants are significant, Burney cautioned that does not mean natural gas generators come without similar risks.
“[Natural gas] produces a little bit less carbon dioxide than coal, but it’s still spewing a bunch of carbon dioxide in the air,” she said. “And from an air pollution perspective, just like with coal, when you burn natural gas, you get carbon dioxide but you also get a set of other pollutants that are produced — it’s just a different mix from coal.”
She said more study is needed to determine what kinds of impacts turning on a natural gas plant may have on both communities and crop yields.
Brick buildings line the wide sidewalks of Main Street in downtown Coshocton, Ohio. On a recent spring day the dogwood trees are blooming. Bright red and white tulips dot the grassy public square, home to the local courthouse and a gazebo.
There are barber shops, an optometrist, a florist, a railroad-themed steakhouse is open for lunch. A trendy public art installment features a small roller coaster designed and built by the local high school and a marquee that blinks “be nice to others.”
But there are also vacant buildings.
Paula Wagner has lived in Coshocton for more than 40 years. She taught Spanish at a local high school for 35. Standing on Main Street, she says Coshocton has been a wonderful place to live, but it isn’t thriving like it once was.
“We still have some businesses, but I think every time one of these big businesses goes out, it takes so many people too,” she said. “They have to move to find jobs outside of town, or they’ll move their whole family.”
In recent years, thousands of jobs have been lost as major employers like General Electric, automotive mat maker Pretty Products, and a WestRock paper mill have closed their doors in the region.
Now, Coshocton is bracing for another blow. At the end of May, two of the three remaining units of American Electric Power’s Conesville Power Plant went dark. The last unit will shutter in May 2020, years earlier than expected. Coshocton is joining the growing list of Ohio Valley communities where coal plants are powering down.
“It’s an integral part of the community,” Denise Guthrie, owner of Mercantile on Main, said of the power plant, which has been operating here for over 60 years. Her shop has for 20 years sold vacuum cleaners and cotton quilting materials. Guthrie, a Coshocton native, greets everyone who comes through her doors like she knows them, largely because she does. Many of her customers, or their families, have worked at the power plant.
“We’re hurting,” she said. “You can physically see that there’s empty buildings, and that’s hard …I remember what it was, you know, but that was the past.”
Guthrie knows first-hand what that loss looks like. Her husband was laid off when the paper mill closed.
“It’s like, bam, bam, bam, you know, our community is hit, you see that,” she said.
Located in eastern Ohio, Coshocton has a mix of rural landscape and industrial labor common to much of Appalachia. It has rolling green hills and the occasional farm stand, but it’s also a place where people take pride in making things. And like so many communities in Appalachia, coal mined here, then later burned here to make electricity, shaped the fabric of this community, and helped give rise to its industrial roots.
In recent years, the community has tried to diversify.
“We have a lot to offer,” said Guthrie. Local wineries have banded together to create a wine trail, and a brewery has opened. Visitors can visit historic Roscoe Village, a restored 19th Century canal town, and hunting and fishing opportunities abound. Coshocton County is home to Kraft Heinz, the country’s largest bacon manufacturer, and American flag producer, Annin Flagmakers, as well as more than a dozen smaller manufacturers.
County and local officials haven’t been sitting idly by as Conesville’s retirement approaches. But as many communities in Appalachia have found, the loss of a coal-fired power plant is a major blow, even in places like Coshocton that are used to dealing with loss.
“I will say, we’re resilient, we’ll survive, we’ll find jobs, somehow we find jobs, we find new opportunities,” Guthrie said. “But it is a concern.”
Closing Conesville
The Conesville power plant began burning coal to create electricity in 1957. Over time, the plant grew to include six coal-fired boilers and could generate 1,590 megawatts of power.
The plant was a significant purchaser of Ohio coal, much of it mined by now-bankrupt Westmoreland Coal Company. At its peak, the plant employed 600 workers.
Plant Manager Ryan Forbes has worked at Conesville for 12 years. He will now oversee its closure.
“I’ve had four family members make lifelong careers here at Conesville, so it’s definitely close to me,” he said.
Shortly after he took the job, AEP announced it was moving up the timetable for the plant’s closure by two years.
Units 5 and 6 at the plant, which were originally scheduled to shut down in 2022, are closing now. Unit 4 is scheduled to close in May 2020. As of June 1, Forbes said, the plant will have 95 workers. They started the year with 160. About 25 employees have found other jobs elsewhere within the AEP system, and some are retiring.
Coshocton is not alone in facing a future without a coal-fired power plant. According to the U.S. Energy Information Administration, from 2007 through 2018, more than 500 coal-fired generators, representing roughly 22 percent of all coal-generated electricity capacity, retired. In the Ohio Valley alone, 34 coal-burning facilities closed from 2009 to 2017.
Cost is the biggest force in the decline of coal, as renewable sources and gas-fired generation are proving cheaper and more flexible.
And there are more closures to come. Utilities have announced the retirement of at least 36.7 gigawatts of coal-fired capacity through 2024 — 117 units in total, according to a recent study by the Institute for Energy Economics and Financial Analysis. Increasingly, utilities are moving up retirement dates for their old coal burners.
Communities in the Ohio Valley are expected to be hit especially hard. In addition to the Conesville closure, utility FirstEnergy Solutions is shuttering three power plants over the next four years. The Bruce Mansfield power plant in Beaver County, Pennsylvania, W.H. Sammis power plant in Jefferson County, Ohio, and Pleasants Power Station in Pleasants County, West Virginia, are all set to close by 2022. The Tennessee Valley Authority voted in February to close the last of the coal-burning units at its Paradise power station in Kentucky, after switching to a new natural gas generator two years ago.
“These are huge economic drivers in the regions that they’re in,” said Gilbert Michaud, an assistant professor of practice at the George V. Voinovich School of Leadership and Public Affairs at Ohio University.
Since 2010, eight coal-fired power plants have closed in Ohio alone. Michaud has studied the associated impacts of these closures.
“They employ hundreds of workers, they have this rippling effect through the use of vendors and supply chain … where they are really driving activity and creating jobs and a lot of ancillary industries too,” he said. “A lot of these rural communities that don’t have very diverse economies, these are core industries and core facilities that are really driving economic development and jobs in these regions.”
Michaud and colleagues published a study in February that examined the impacts of the closure of two Dayton Power and Light coal-fired power plants last year in Adams County, Ohio. They found the county and local government and school districts were set to lose $8.5 million in tax revenues due to the closures, 370 direct jobs and another 761 associated jobs.
Michaud said displaced coal plant workers have limited local options to find new employment.
“We did find that there were emerging industry clusters in things like tourism and rural healthcare, but the problem here is that these folks would face like a wage challenge if they were to transition to new careers altogether,” he said. “And so a lot of these folks have been moving away, both throughout Ohio and out of state altogether, unfortunately.”
Cutting School
Conesville lies just a few miles outside Coshocton. The power plant’s three massive smokestacks have been a fixture of the small town’s landscape for decades, alongside a convenience store, post office, and a school, Conesville Elementary.
River View Local School District Superintendent Dalton Summers said having the power plant in the district was a huge advantage.
“When you have a power plant in your district it’s almost a separate tax source,” he said.
Until recently, Conesville was valued at $72.2 million, and it paid a significant amount of property tax and a state utility tax to the county and school district. Of River View’s $22.1 million annual budget, 10 percent comes from the power plant.
Because of that high level of local funding, Summers said River View has traditionally received less funding from the state. Still, the millions paid by the plant locally in taxes made that a worthwhile trade-off.
“River View was able to offer a lot of things that a lot of rural communities wouldn’t be able to offer,” he said, including eight advanced placement courses at the high school, three foreign languages, a swim team, and small class sizes.
The last time the district built a new school it didn’t have to ask local taxpayers to chip in. In fact, Summers said the district hasn’t asked for a new operating levy in more than 25 years.
In October 2017, the Ohio Department of Taxation devalued the plant from $72.2 million to $34.7 million, resulting in a $1 million revenue loss for the school district. When the plant is fully closed, the district is expected to lose $2.2 million.
“We tell people if you just take 10 percent out of your own income, you’re going to have to make adjustments to that,” he said. One adjustment: River View will close one of its four elementary schools next year. In order to avoid other cuts, Summers expects the district will need to ask for taxpayer support in the coming year.
Conesville’s closure is more than just a financial blow, he added. AEP has been a partner to the schools. If they needed something, they could call.
“It’s not going to just affect the school in the sense of money,” Summers said. “You know, we have a lot of employees, we have a we have a lot of kids’ parents that work for this plant, and this could cause relocation on their account.”
Summers said he thinks this closure, unlike some of the others the region has weathered, is different.
“Make no mistake it is a big impact. Any plant that closes in a small community is a big impact,” he said. “A plant like AEP, with the level of jobs that it did provide, the good livings people made that work there, the tax base to the schools — it’s really big.”
United Front
Local officials are not sitting idly as the plant closes down.
“This group of ladies sitting right here, we have a really strong united front locally as to how we’re going to help our community through any type of loss,” Swigert said.
Each of these women work with the local business community. They’ve also each been personally affected by a past business closure in the region.
“We have had moments of heartache and then picked ourselves back up and said, ‘okay, we can pull through this, we’re going to be able to do it,’” she said. “And we’ve done it quite well in the past.”
As AEP prepares to close its doors, they have devised a multi-pronged plan to help the community that borrows heavily from their experience dealing with past manufacturing losses.
It includes working to identify sites for new manufacturers and cleaning up existing brownfield sites to boost the tax base. Swigert admits the efforts, driven in part by grant funding, are in the early stages.
For workers facing unemployment, Ohio Means Jobs and Coshocton County Job and Family Services have stepped in to offer resume writing and interviewing classes at the Conesville plant.
“I think it’s really important to recognize that these employees, a lot of them graduated high school and went straight to AEP afterward,” Swigert said. “It’s not that they don’t necessarily know how to interview or create a good resume, but they never had to.”
The local branch of Central Ohio Technical College hosts job fairs. Gibson said interest in employing laid-off AEP workers is running high.
“Just the initial rumors of AEP closing, the surrounding counties lit up on my phone because they know that these workers are loyal, and that they’re faithful and that they are skilled,” she said.
Heidi Binko, executive director and co-founder of the Just Transition Fund, a nonprofit that works with coal communities undergoing transition, said as a growing number of communities find themselves facing coal plant or mine closures, it’s smart to throw everything they have at what comes next.
“There is no one silver bullet, right?” she said. “There is not one thing that is going to work.”
Ohio University Professor Michaud agrees and said in Ohio local economic development organizations and others are heavily involved in supporting workers affected by coal plant closures. But he said his research has shown limited participation by workers.
Michaud has examined transition efforts by communities across the country and the world, and said many try to leverage local assets, such as tourism or agriculture, with varying levels of success. A coal plant closure, he said, is a uniquely large economic loss that is hard to get past.
“A lot of these communities, we found haven’t really fully been able to bounce back to what they once were after a large coal plant closes,” he said.
He said rural communities with limited job options are wise to offer technical assistance, job training, and reemployment.
“Basically, give folks options so they aren’t forced to leave,” Michaud said. “I think that there’s a lot of people who really care about these issues, and that really love these rural Appalachian communities and counties, and that are trying to do things to help enhance the well being of the folks that live there and keep them in the region.”
Moving Forward
Joe Eggleston has worked at the Conesville plant for six years and he hopes to stay in Coshocton. He attended both a resume and interviewing class hosted at the plant by Ohio Means Jobs. During a mock interview, Eggleston used his quiet confidence to win over Gibson, even when she threw him a curveball question: “If you were a tree, what type would you be?”
Without missing a beat, Eggleston answered. “An oak,” he said, “very strong, very sturdy.”
“I like that,” Gibson grinned. When Eggleston mentioned he’d only missed two days of work in the last six years, she exclaimed, “You’re hired.”
Working at Conesville was a lifelong dream for Eggleston. His father worked there for 25 years before him, and he’s enjoyed his time at the plant.
“It is sad, you know, there’s been a lot of generations that went through here,” he said.
But he also isn’t worried about his last day; he’s confident he will find a job.
“I hoped it would last longer,” he said. “It is what it is, and I’m just going to move forward.”
It’s been two years since President Donald Trump took office and began rolling back environmental regulations on the coal industry.
At a November rally in Huntington, West Virginia, the president took credit for a coal comeback in front of a cheering crowd.
“We’ve ended the war on beautiful, clean coal and we’re putting our coal miners back to work,” he said. “That you know better than anybody.”
But federal data about the industry tell a different story.
Mine operators and independent contractors are required to report regular employment information to the Department of Labor’s Mine Safety and Health Administration, or MSHA. Preliminary figures for 2018 show 80,778 people were employed by mine operators and contractors. That’s a record low, and about a thousand fewer than were employed by coal in the last year of the Obama administration.
Nationwide, coal plant retirements neared a record high, and overall coal production dropped to the lowest level in nearly 40 years, according to the U.S. Energy Information Administration, a non-partisan government agency that tracks energy trends.
In the Ohio Valley, things looked much the same. In 2018 two prominent Ohio Valley utilities announced a spate of coal power plant closures, federal data show the region lost 150 industry jobs, and Westmoreland Coal, which has a substantial presence in Ohio, declared bankruptcy.
However strong exports of one type of coal continued to support jobs for those who provide metallurgical coal, which is used to make steel. That boosted employment in West Virginia, where the president’s supporters say he is keeping his promise to revive the industry. Elsewhere, others aren’t convinced and are looking for ways to fill the void left by coal’s decline.
Environmental Rollbacks
The Trump administration has leaned heavily on the U.S. Environmental Protection Agency to try to boost the region’s coal industry. In March, 2017, Trump signed an executive order that kicked off an in-depth review of a series of environmental regulations. Since then, the administration has proposed a series of regulatory rollbacks aimed at helping struggling coal plants and operators.
The Trump EPA has also moved to roll back existing regulations that govern the storage of toxic coal ash. In December, the agency proposed a rule revision that would allow coal plants to emit more carbon dioxide per megawatt-hour of electricity generated by scrapping a requirement that plant operators install expensive technology that reduces emissions. The agency in December also proposed weakening a regulation that limits mercury and other toxic emissions from coal power plants.
But many industry analysts believe Trump’s looser environmental rules have not helped the industry.
“So we had some pretty significant regulatory rollbacks in 2018,” said Trevor Houser, a coal analyst at the independent research company Rhodium Group. “And yet, 2018 was a record year in terms of coal plant retirements.” [Story continues below map]
Houser said there is also little indication any utility in the country is planning on building a new coal-fired power plant, even under the current, more relaxed regulatory environment.
Across the Ohio Valley, utilities announced more coal power plant closures in 2018. After Ohio-based FirstEnergy Solutions declared bankruptcy, it announced it would close two coal-fired power plants, one in Pennsylvania and one in Ohio. Another of its plants in West Virginia will close by 2022. Another major utility, American Electric Power, announced it was moving up the closure date for some units in its Conesville plant in Ohio to 2019.
With more power plant closing there are fewer places to sell thermal coal, which is burned to make electricity, and that has a major impacts coal producers in the region.
“If you look at the share of where the coal was headed, the domestic utility market for West Virginia coal continues to decline,” said Jason Bostic with the West Virginia Coal Association. “And that’s extremely concerning.”
Nationwide and as well as in the Ohio Valley the amount of coal mined dropped to the lowest level in nearly 40 years. Coal exports, however, were up, driven largely by international demand for metallurgical, or met coal, by Asian countries.
“There’s the kind of continual disconnect between the poor fate of the thermal coal market and a little bit more resilient met coal market,” Houser said.
To meet higher met coal demand, some mines in West Virginia and Virginia have reopened. Federal data from MSHA show West Virginia mines added a little over 500 jobs in 2018.
Tom McLoughlin trains coal miners in southwestern Virginia, where some met coal mines have ramped up production. He said he’s been busy since Trump took office.
“As soon as Trump got elected It was like somebody taking the finger out of the dam,” he said. “There was all kinds of activity including especially the training, and it’s held up fairly well since.”
But even in West Virginia, where things have looked slightly better for the industry, there were also some high-profile mine closures. A mine in Wyoming County shut its doors in October, putting about 400 miners out of work.
There are a lot of indications that the international demand for met coal, especially by China, is cooling off.
“In 2019 we have some pretty troubling signs about the outlook for the Chinese economy this coming year and that could take the wind out of the sails of the metallurgical coal market pretty quickly,” said Houser with the Rhodium Group.
Temporary Bump?
It’s possible that West Virginia’s bounce in production could be a brief one. Elsewhere around the Ohio Valley coal employment has been stagnant, at best. Ohio mines added just 16 jobs last year, and Kentucky lost almost 400 jobs, according to MSHA data.
Retired Kentucky miner Larry Miller said it’s not surprising the data show the industry has not bounced back. He added that he didn’t have a lot of faith in Trump’s ability to revive the industry in the first place.
“I don’t think it’s sustainable,” he said. “The EPA relaxing of the rules might help some, but I don’t think it’s the main driver for the job loss.”
Miller worked for more than two decades underground and said he made a good living. In his own backyard he said he’s seeing first-hand that coal is often no longer an economic source for electricity. For example, near his slice of western Kentucky a group of utilities is installing an 800-acre solar farm, further evidence, he said, of coal’s declining importance.
“It’s not going to be gone but it’s not going to be the economic engine that it once was,” Miller said. “And I made a good living in coal for a long time and I liked it, so I don’t take pleasure in saying that.”
Recently, the EIA adjusted downward its coal forecast. It says coal production is expected to hit a record low in 2019. Appalachia will see its overall coal production drop from 201.5 million tons in 2018 to 170.1 million tons in 2020, according to the EIA forecast.
Limited Retraining
That doesn’t bode well for miners. Houser, with the Rhodium Group, said while the Trump administration doubled down to boost coal, it has not offered any additional aid for job retraining.
“The past few budget proposals from the Trump administration have actually reduced the amount of support for retraining and economic diversification and coal retraining in coal country,” he said.
Clemmy Allen has been retraining coal miners for more than 30 years for the United Mine Workers of America.
Since 2012, the UMWA’s Career Training Centers in Appalachia has relied on a Department of Labor grant, which provides $5000 in tuition assistance and a $20 daily stipend to West Virginia miners who have been laid off or lost their jobs. He said thousands of miners have taken advantage of the program, but acknowledged it’s also limited.
“It’s very, very difficult for for a person just to … just shut down and go into training and not have money to, you know, meet their monthly obligations,” he said.
Allen said in previous years the center had more federal grants to retrain miners in other states, and he says there are thousands of miners who have lost their jobs over the years who have since found work, but would like to be retrained to do something else.
“We never have enough resources, never,” he added.
Correction: An earlier version of this story incorrectly stated where Tom McLoughlin is based. He is based in southwestern Virginia, not northern Virginia.
A spokesperson for electric utility FirstEnergy Corp. — whose subsidiary Allegheny Energy Supply owns and operates the plant — said the plant’s ownership will change. The deal will allow Pleasants to continue operating past January 2019 when it was previously slated to close.
“Keeping Pleasants in operation through May 2022 allows the plant to fulfill current capacity obligations and provides additional time for evaluation of the long-term plan for the station prior to deactivation,” Jennifer Young, a spokesperson for FirstEnergy Corp., said in an email.
Allegheny Energy Supply will transfer the plant to bankrupt subsidiary, FirstEnergy Solutions. The deal is part of a larger settlement agreement approved by a bankruptcy court last month.
Under the agreement, FirstEnergy Corp. will make a settlement payment of $225 million to FirstEnergy Solutions and issue $628 million in notes for the subsidiary that will mature on Dec. 31, 2022. Collectively, this money will be used to pay down the $2.1 billion owed to its creditors.
Allegheny Energy Supply will continue to operate Pleasants until the transfer is complete. A date has not been set for when that will happen. Under the agreement, FirstEnergy Corp. will continue to own the plant’s coal ash impoundment, McElroy’s Run, and any related liabilities.
In 2016 FirstEnergy Corp. put Pleasants, which employs about 190 people, up for sale. The company announced in February it would close the 1,300 megawatt power plant unless it could find a buyer. An attempt to sell the power plant to other FirstEnergy subsidiaries, Potomac Edison and Monongahela Power, was shot down by federal regulators earlier this year.
Federal Help?
In a statement, Gov. Jim Justice praised the move and specifically thanked President Trump, Department of Energy Secretary Rick Perry and others for their help “to make sure this plant stays open.”
However, it’s unclear what role the federal government played. A plan to bail out coal and nuclear plants by forcing grid operators to buy power from those struggling plants for two years has stalled.
One statute outlined in the plan is the 1950 Defense Production Act. The law addresses options for keeping essential supply chain facilities open during wartime or similar emergencies.
The Department of Energy could also use emergency powers under the Federal Power Act. Known as section 202(c), the provision would allow the agency to intervene if the electricity grid faces an emergency. In the past, it has been used during times of war and during natural disasters.
FirstEnergy Solutions lobbied the agency to immediately intervene to stop a series of plant closures. Days later, it declared bankruptcy.
Recent reporting by Politico indicates the bailout plan, as written, has been shelved because it faces opposition from inside the White House.
A request to both the Department of Energy and governor’s office for more information went unanswered.
Even if the federal government revives the plan, many energy analysts say subsidies will only go so far to help keep struggling coal plants going because they do not change the underling market forces: cheap natural gas and stagnant energy demand growth have made coal a more expensive source of electcity.
In June, federal regulators did order regional grid operator PJM Interconnection to redesign how it buys electricity, which could benefit Pleasants down the road. Many of the proposals being considered eliminate the effects of state-subsidized nuclear and renewable resources, which would place electricty generated by coal plants, including Pleasants, on a more even footing.
Officials are not expected to finalize the redesign until 2020.
Ohio-based utility FirstEnergy Solutions made waves last month when it asked the Department of Energy to grant it an emergency order to help keep coal and nuclear plants operating across the Ohio Valley.
The request even hit the president’s radar. Speaking earlier this month at a roundtable event in White Sulphur Springs, West Virginia, Donald Trump said the administration was examining the utility’s request.
“We’ll be looking at that 202, you know what a 202 is, we’ll be looking at that, we’re trying,” he said.
The president was referring to a little-used provision of the Federal Power Act, section 202(C). The section of the law allows the Department of Energy to intervene if the electricity grid is in jeopardy. Typically, the provision has been used during times of war or during natural disasters.
Ohio-based FirstEnergy, which serves 6 million customers, wants an emergency order to help keep struggling nuclear and coal plants in Ohio, Pennsylvania and West Virginia from closing. In a letter sent to the federal government, the utility said the power grid faces grave threats if coal and nuclear plants are allowed to close.
The company argues coal and nuclear power deserve extra compensation because they deliver baseload power, or electricity that can be generated at all times of day and can be always relied upon. Without that,the utility says, the power grid is in danger if a major storm hits.
FirstEnergy cited a recent report by DOE’s National Energy Technology Laboratory that found the East Coast would have experienced widespread power outages from the recent “Bomb Cyclone” winter storm without electricity generated by coal-fired power plants. It found that coal was the most resilient form of power generation during the 12-day storm. It also said removing coal from the energy mix could worsen threats to the electrical grid’s dependability during future severe weather events.
Regional grid operator PJM Interconnection operates across a 13-state region. PJM strongly rebuked claims the grid’s reliability is threatened by closing coal and nuclear plants. If the 202(C) order is granted, PJM would negotiate a contract to provide compensation to coal and nuclear plants across its service area.
Other opponents, which include environmental groups and oil and gas industry trade group the American Petroleum Institute, say FirstEnergy’s request is really an economic “Hail Mary.” Days after asking for the order, the company filed for bankruptcy.
“Even if [Energy Secretary] Rick Perry approves this request, there’s still a long way to go before any money exchanges hands,” he said. “There would be contested proceedings at [the Federal Energy Regulatory Commission]. There’s going to be litigation in federal court. There is a lot of obstacles before this actually becomes reality.”
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The order may also set a bad precedent, said Sonia Aggarwal, vice president of the energy policy think tank Energy Innovation. She said there are many companies in the United States with coal and nuclear plants in their portfolios that are no longer profitable due to the nature of running an aging fleet, cheap natural gas and to a lesser extent the added cost of complying with environmental regulations.
She said if DOE approves the use of the 202(C) to help power producers, that could harm competitive electricity markets.
“If at any moment the government can kind of come in and say — not under any sort of real emergency situation, but just come in and say — ‘Look, we want to bail out these particular units,’ I don’t know any investors that would want to get involved in a market like that” she said.
Federal Limits
Pressure is mounting on the federal government to follow through on Trump’s pledge to help coal-fired power plants. Data collected by the Energy Information Administration through January 2018 shows that 533 coal plants and six nuclear plants have closed in the past decade.
Proponents of federal intervention for coal plants are adamant DOE can and should use its emergency authority. Speaking at the Bloomberg New Energy Finance Future of Energy Summit in New York last week, coal magnate Robert Murray said the federal government’s only option to help coal plants is to grant the emergency request.
“It’s absolutely needed,” Murray told the crowd. “It can be for a specific time frame to stop these nuclear and coal closures until we get our house in order to ensure the resilience, reliability and security of the grid. It doesn’t have to be permanent. It must be done.”
Murray’s company, Ohio-based Murray Energy Corp., is the largest supplier of coal to the plants FirstEnergy would shutter. According to an analysis by S&P Global Market Intelligence, in 2017, the company shipped 6.7 million tons of coal to FirstEnergy Solutions, nearly 12 percent of Murray’s entire coal output.
Last year, Murray also asked DOE to intervene because of impending fears FirstEnergy would file for bankruptcy. The company warned the White House that if the utility went out of business, Murray Energy would follow. That request was denied.
Rick’s Pick
Energy Secretary Perry has so far been tight-lipped on the agency’s thinking.
Last year, the agency proposed a rule under another part of the Federal Power Act that would have provided additional compensation to coal and nuclear plants, but that was shot down by FERC as illegal.
At a recent federal budget hearing, West Virginia Republican Representative David McKinley pressed Perry on what else the federal government can do.
“There may be other options, which we need to look at as well,” Perry said. “Expedition is of importance.”
Multiple analysts said they aren’t sure what else the federal government can do under existing law. States have so far been largely reluctant to pass legislation bailing out coal and nuclear plants.
Aggarwal, with Energy Innovation, said the government might be better served helping communities with coal-fired power plants make a transition to a more diverse economic base.
“There are not a ton of options left for the federal government to intervene,” she said. “In fact, I think if the federal government were truly concerned about the well-being of the communities that are in transition right now they would not be looking to bail out the companies that are running these power plants.”
DOE has set up an email address to take comments on 202(C) requests broadly. A spokesperson did not respond for a request for comment, but said last week the agency is still deliberating.