SWEPCO to retire 1 coal-fired plant, cease coal operations at another

Shreveport, La.-based Southwestern Electric Power Co. (SWEPCO), a utility of Columbus, Ohio-based American Electric Power (AEP), will cease operations at two of its coal-fired power plants and retrofit another as it works to meet environmental standards.

SWEPCO announced Thursday (Nov. 5) plans to retire the H.W. Pirkey Power Plant in Hallsville, Texas, in 2023 and cease coal operations at the Welsh Power Plant in Pittsburg, Texas, in 2028. Also, the utility plans to upgrade the coal-fired Flint Creek Power Plant in Gentry.

SWEPCO’s compliance plans for two recently revised environmental regulations include the end of coal operations at the Texas plants and changes to its Gentry plant. It will file the plans in November for the U.S. Environmental Protection Agency’s Coal Combustion Residuals rule. The rule applies to the handling and storage of coal ash at each plant. SWEPCO owns 580 megawatts of generating capacity at Pirkey, 1,053 megawatts at Welsh and 258 megawatts at Flint Creek.

The Gentry plant will continue to operate with the installation of a dry bottom ash handling system and other facilities that meet the EPA rule and the Effluent Limitation Guidelines requirements in 2023. The existing ash pond at the site will be closed, and the ash will be sold for reuse or moved to the plant’s regulated onsite landfill.

The 477-megawatt John W. Turk Jr. Power Plant in Fulton meets the rule and guideline requirements.

“Our Pirkey and Welsh employees have provided decades of safe and reliable service to SWEPCO customers, which will continue until the transition is complete,” said Malcolm Smoak, SWEPCO president and chief operating officer. “We are committed to working with our employees, local leaders and our communities in East Texas to help them manage these transitions.”

Transition options for affected employees include severance, educational and retraining resources and other potential job opportunities at SWEPCO and AEP.

“In making these difficult decisions, we have worked to balance the remaining life and economic viability of each of our coal-fueled generating units with other options for delivering power, including renewable energy and natural gas, in a resource mix that benefits our customers and the environment,” Smoak said.

The analysis includes the level of investment needed to comply with the recently revised EPA rules, each plant’s remaining operating life and the potential future compliance costs. SWEPCO will continue to evaluate options for the Welsh plant, which will cease coal operations in 2028.

SWEPCO serves more than 543,000 customers in three states, including Arkansas.

COAL CONSUMPTION FALLS
The amount of coal the U.S. electric power sector consumed declined 30% to 184.8 million short tons in the first half of 2020, from the same period in 2019, according to the U.S. Energy Information Administration.

Coal consumption in the electric power sector has been falling since it rose to an annual record of 1,045 million short tons in 2007. The decline is happening as many coal-fired power plants are retiring or are converted to natural gas, and this can be attributed to tighter air emissions standards and the decreased cost-competitiveness of coal compared to other resources.

Also, coal consumption declines in the electric power sector so far in 2020 are a result of competition arising from low natural gas prices, which fell to record lows at U.S. benchmark Henry Hub in the first half of the year. Mild winter temperatures and responses to the COVID-19 pandemic also reduced electricity demand. Lower demand also contributed to the decrease in coal consumption for electric power in the first half of 2020.

Electric power coal consumption is expected to increase in the second half of 2020, according to the EIA’s most recent Short-Term Energy Outlook. However, the consumption won’t rise to levels in the second half of 2019. The projected level of coal consumption for 2020 will be the power sector’s lowest since 1975.

Coal consumption also is falling in other sectors. Coke plant coal consumption declined 14% to 9.2 million short tons between January and July, from the same period in 2019. Coke plants are expected to consume an additional 6.4 million short tons in 2020. The projected consumption level for 2020 would be 13% lower than 2019 levels.

Coal consumption in the retail and other industrial sectors, which includes industries such as cement production and primary metal manufacturing, declined to a record monthly low of 1.9 million short tons in April when many businesses and manufacturing facilities began to shut down to mitigate the spread of COVID. Between January and July, the retail and other industry sector consumed 14% less coal than in the same period in 2019.