WMKY

Report Predicts 3 Coal Plants Could Close Within 5 Years

Jul 29, 2021
Originally published on July 29, 2021 6:01 am

A report published by the National Bureau of Economic Research shows that the John Amos, Mountaineer and Mitchell plants will no longer be economical to operate in five years.

The West Virginia Public Service Commission must decide in the coming weeks whether to approve an environmental compliance surcharge on electricity customers.

That fee would pay for wastewater treatment projects that are required to keep the plants in operation through 2040. But one of the report’s authors predicts they won’t last to the end of this decade.

“Inside and outside our model, 2040 is hard to imagine,” said Scott Holladay, an associate professor of economics at the University of Tennessee. “And even 2030 is feeling optimistic at this point, for sure.”

Holladay says his model is mostly accurate, though he noted that the model can’t know every specific circumstance surrounding each plant.

Still, Holladay’s model says one of the three units at the Amos plant should already be taken offline because it no longer operates economically. The other two would close in five years.

The model predicts one of Mitchell’s two units would close in two years, and the other in three.

It predicts Mountaineer’s single unit would shut down in three years.

Appalachian Power and Wheeling Power have told state regulators that 2028 is the earliest date the plants would close, three years after Holladay’s model forecasts they could close.

The plants are aging. Mitchell and Amos began operating in 1971, and Mountaineer in 1980.

“They're not very efficient at turning coal into power,” Holladay said, “and new, more efficient technologies coming down the grid and kind of eating their lunch.”

Cheap, abundant natural gas has been eroding coal’s share of electric power generation for more than a decade. Meanwhile, the cost of wind and solar energy has plummeted.

The demand for electricity is flat, even factoring in the pandemic.

Appalachian Power and Wheeling Power, both subsidiaries of Ohio-based American Electric Power, have testified that upgrading the plants represents the best value for ratepayers.

Doing the work on their wastewater systems would delay the cost of retiring the plants and finding new sources of power to replace them.

Still, power customers will have to pay those costs whenever the plants shut down.

There’s also the delicate matter of what happens to the communities that depend on the plants for jobs and tax revenue, as well as the coal mines that supply them.

State regulators are under pressure from lawmakers and coal industry supporters to prevent the plants from closing. Holladay says the utilities may choose to keep them open and lose money.

“And so it's a tough spot if you own these utilities,” he said, “so I understand why they're struggling to think about what their options are.”

A final decision should be coming in the next several weeks.

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