FirstEnergy Coal Plant Closures Complex

  • One of the plants being closed is one of the highest emitters of particle pollution in Pennsylvania (Hatfield's Ferry, in red). The level by which emissions are reduced after the FirstEnergy closures depend on what they're replaced with, says one energy expert. Graphic: Reid R. Frazier

  • Google Earth map of power plants in the Northeast covered by Mercury and Air Toxics Standards. Blue includes coal units. Purple represents oil and coal. Red is oil. Two FirstEnergy coal-fired power plants in southwestern PA are slated to close. Graphic: Google Maps

July 27, 2013

The announcement that two FirstEnergy-owned coal-fired power plants in southwestern Pennsylvania will be shuttered and 380 jobs lost is raising, for some, the old tension between environment vs. economy, but the reasons behind the plant closures may not be so cut and dried. 

Last year, the Environmental Protection Agency heralded its new Mercury and Air Toxics Standards (MATS) as an historic win for people’s health. The EPA said the standards would prevent 530 premature deaths in Pennsylvania and save up to $4.4 billion dollars in health benefits in 2016. One of the plants to be closed—Hatfield's Ferry—has for years been one of the state's biggest sources of fine particulate pollution and sulfur dioxide.  The other plant to be closed, located in Washington County, is known as Mitchell.

The total capacity of the plants to be deactivated, according to FirstEnergy, is 2,080 megawatts, representing about 10 percent of the company's total generating capacity, but about 30 percent of the estimated $925 million cost to comply with MATS.

"FirstEnergy at first estimated it would cost about $1.3 billion to comply (with MATS), and they’ve since revised it down to $925 million. But that’s still obviously a large cost," says Anya Litvak, business reporter with the Pittsburgh Post-Gazette. "Without these two plants, the Mitchell and Hatfield, it would cost them $650 million for them to comply for the rest of the plants.  When I asked FirstEnergy if the MATS rules were the reason that they decided to close these plants, they said the lack of growth in the demand for power was a more important reason and that, even if these regulations were never passed, they probably would still right now be having to make the decision which plants to close."

Robert Whalen, vice president of Utility Workers Local 102, says that he doesn't buy FirstEnergy's complaint that regulations were a factor in the closures. "The reality of it is, they’ve known for a long time that these standards were coming," Whalen says.

Pennsylvania workers aren't the only ones feeling the pain, Litvak points out. "Just a couple of days after FirstEnergy made their announcement, AEP, which is American Power, said it would close a 585-megawatt coal plant in Ohio, and they also cited the same reasons—compliance costs and current market conditions."

Greater energy efficiency is another factor driving the plant closures, Litvak says. 

"There are a number of states that actually have energy efficiency and conservation standards, Pennsylvania is one of them. It basically has mandated utilities to reduce their demand and reduce their peak demand by a certain percentage," she said. "Utilities are responsible for their customers wanting less electricity." 

Finally, there is the matter of transmission versus power generation—and the former is more appealing to investors than the latter right now. 

"When (FirstEnergy) announced that they were going to be closing some of the other plants—they announced that they were going to close nine last year—they also committed to about $700 million in transmission projects that would relieve some of the reliability issues that could occur from closing those coal plants, so they’re essentially spending more money on transmission, to make up for some of the issues that could be raised through the loss of some of their coal generation," Litvak says. "Moody’s Investor Services recently...rated their transmission assets the highest because of that." 

Gregory F. Reed, associate director of the University of Pittsburgh’s Center for Energy, explains more about the generation versus transmission picture. 

"You know, the replacement of these plants, and many of them, by the way, were near urban centers where we consume we decommission these plants...we're not only replacing them with different types of those resources but those are also being located more remotely from the end user, and so we have to deal with this by also upgrading our distribution. That in itself is a big challenge and something that's of major issue in this country now as well," Reed says.

Reed added that, while he sympathizes with workers losing their jobs, he still envisions a robust future for those seeking employment in the energy sector and for energy companies as well.

"If we begin to replace the decommissioned coal plants, for example, with new natural gas facilities, or, as we've seen in a couple cases, retrofitting the decommissioned coal plants to natural gas, we could certainly actually increase our net capacity," Reed says. "We've done fairly well with wind development in Pennsylvania, but we're in the top 10 of the country in terms of solar energy production. We have a tremendous opportunity in the renewable sector for growth as well."

The Post-Gazette's Litvak points out in a recent article that FirstEnergy isn't going down the road of coal and gas co-generation retrofits.

But FirstEnergy seems to be on board with a positive view of the future opportunities.  The company said it "will continue to operate one of the nation's largest, cleanest and most diversified electric generating fleets. The company's fleet after the deactivations will be comprised of 56 percent coal, 22 percent nuclear, 13 percent renewables and 9 percent gas/oil, and will have a generating capacity of more than 18,000 megawatts... With the deactivation of these two plants, in addition to the nine plants the company announced for deactivation last year, nearly 100 percent of the power generated by FirstEnergy will come from resources that are either non- or low-emitting, including nuclear, hydro, pumped-storage hydro, natural gas and scrubbed coal units. The company expects to invest approximately $650 million in MATS-related control technology to enhance or modify existing air quality equipment or install new equipment on its remaining facilities."

Reed says that any improvement in air quality depends on just how generation capacity is replaced. 

"For every plant that we decommission, we certainly have to replace the power-producing capability in some way," Reed says. "Natural gas comes with emissions as well—much less, but it won't be a net zero."