Edison To Start Shutting Down Coal Plants
March 01 2012 - 6:03PM
Dow Jones News
Edison International (EIX) plans to shut down at least two aging
coal-fired power plants in what could be a growing wave of
retirements as low natural-gas and electricity prices and stricter
pollution rules make many of these facilities unprofitable.
Edison will shut down its two Chicago coal-fired power plants --
one this year and one by 2014 -- rather than install
pollution-control equipment to comply with state pollution limits,
the company said. Edison said it also would likely shut down a
third coal plant in Waukegan, Ill., and possibly others.
Plunging natural gas prices have driven power prices to historic
lows, putting pressure on power-plant operators like Edison that
use higher-priced coal to fuel their plants and cutting revenue.
Meanwhile, new federal limits on emissions of sulfur dioxide,
mercury and other toxic substances are forcing coal-plant operators
to decide whether to invest in expensive pollution-control
equipment, or shut down plants. Companies are increasingly
announcing plans to shut down aging coal plants as the cost of
installing pollution-control equipment can exceed the value of the
plant.
"We're seeing a lot of announced retirements, not just ours,"
Edison Chief Executive Ted Craver said late Wednesday during a
conference call with analysts.
GenOn Energy Inc. (GEN) said Wednesday it plans to shut down
seven coal-fired power plants.
American Electric Power Co. Inc. (AEP) has said it plans to shut
down up to 6,000 megawatts of aging coal-fired power plants, about
half of them in Ohio, to comply with federal pollution limits.
Edison, which is based in Rosemead, Calif., and operates a
profitable California utility, recorded $680 million in costs in
the fourth quarter associated with its plans to shut down the
Illinois coal plants. Craver said the company would decide whether
or not to shut down additional plants after seeing where power
prices go over the next few months.
If power prices remain low, Edison would consider selling
assets, restructuring its wholesale power business and/or shutting
down additional coal plants, Craver said.
AllianceBernstein analyst Hugh Wynne predicted that Edison would
shut down 2,100 megawatts of its Illinois coal plants, or about 40%
of the fleet. The retirements are likely to cost Edison about $1
billion, Wynne said.
Edison's Homer City coal-fired power plant in Pennsylvania isn't
likely to be shut down, although the company lost control of that
plant after the facility ran into financial trouble.
Edison said it is in the process of transferring its interest in
the Homer City plant to the other owners of the plant -- which
include General Electric Co. (GE). As a result, Edison to took a
$1.03 billion charge last quarter.
Edison said the Homer City plant needs about $750 million of
pollution-control equipment to comply with federal emissions
limits.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;
cassandra.sweet@dowjones.com
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