Dominion to shut Mass. Salem Harbor coal/oil plant

Thu Nov 18, 2010 1:47pm EST

 * Dominion to shut plant due expected environmental rules
 * Dominion also to shut State Line plant in Indiana
 * If EPA ozone rules change, plants may not shut
 NEW YORK, Nov 18 (Reuters) - Dominion (D.N) expects to shut
the Salem Harbor coal/oil-fired power plant in Massachusetts
within seven years as the high cost of keeping up with ever
more stringent pollution rules could make it uneconomic to keep
operating the plant, a company executive said.
 With the federal government looking to impose a cost on
carbon emissions to combat global warming and environmental
regulations becoming increasingly stringent year over year,
several power companies, including Exelon Corp (EXC.N),
Progress Energy Inc PGN.N and American Electric Power Co Inc
(AEP.N) already have announced plans to retire some older, less
efficient coal plants.
 Dominion CFO Mark McGettrick told investors this month at
the Edison Electric Institute conference in Palm Desert,
California, the company expects to close two merchant
coal-fired generating stations within the next seven years, if
changes to environmental regulations occur as expected.
 The two plants are the 738-megawatt Salem Harbor and the
515 MW State Line plant in Indiana. The first of the coal units
still operating at both plants entered service more than half a
century ago.
 The environmental regulations McGettrick referred to was
the U.S. Environmental Protection Agency's planned one-hour
ozone rule for 2015-2017.
 "If that rule goes into effect, we do not plan to install
expensive environmental controls at either of those two
stations," Dominion spokesman Dan Genest told Reuters
Thursday.
 Jon Wellinghoff, chairman of the U.S. Federal Energy
Regulatory Commission, has said the retirement of about 60
gigawatts (60,000 MW) of coal-fired capacity was "very likely
within five years" as the EPA moves forward with more stringent
emissions standards.
 That is about 20 percent of the 300 gigawatts of coal-fired
capacity, which mostly run all the time as baseload plants,
generating about 45 percent of the nation's power. But that is
down from about 50 percent a couple of years ago as cheap
natural gas prices have boosted its share of the generating mix
from about 20 percent to about 24 percent now.
 Genest said: "The key word in McGettrick's statement is
'expect.' Our future decision is dependent on what happens.
Environmental regulations get delayed ... courts change rules
... We don't know if the EPA rules will go in effect in
2015-2017.
 "We have made no definite plans on a time or date to shut
the plant at this point," Genest said.
 PLANT NEEDED FOR RELIABILITY
 ISO New England, which operates the regional power grid,
could again decide Salem Harbor is needed for reliability -- as
the ISO has over the past couple of years -- Genest said.
 Dominion recently asked the ISO to withdraw the plant from
the grid's June 2011 forward capacity auction for 2014-15. The
ISO is not expected to decide on the request until next year.
 Genest said Dominion wants to withdraw from the auction not
because the company wants to shut the plant but because the
capacity price has been coming down over the past few years.
 The capacity auction pays power suppliers (and demand
response customers who agree to reduce usage) to remain
available to maintain the long-term reliability of the grid.
 "We do not anticipate (capacity prices will go) up, but if
they do, and it is profitable to keep running the plant, we may
keep it going," Genest said.
 The shutdown of Salem Harbor would hit the city of Salem
hard. Last year, the plant, which employs about 145 people,
paid about $4.5 million in taxes, making it the biggest
taxpayer in the city, according to local news reports.
-----------------------------------------------------------
PLANT BACKGROUND/TIMELINE
STATE:      Massachusetts
COUNTY:     Essex
TOWN:       Salem about 20 miles (32 km) northeast of Boston
OPERATOR:   Dominion
OWNER(S):   Dominion
CAPACITY:   738 MW
UNIT(S):    - 1 - 79 MW coal/oil-fired steam turbine
         - 2 - 77 MW coal/oil-fired steam turbine
         - 3 - 145 MW coal/oil-fired steam turbine
         - 4 - 437 MW oil-fired steam turbine
FUEL:       Coal/Oil
DISPATCH:   Intermediate/Peaking
TIMELINE:
1952 -      Units 1 and 2 enter service
1958 -      Unit 3 enters service
1972 -      Unit 4 enters service
1998 -      PG&E buys Salem Harbor and other generating
         facilities from New England Electric Systems (now
         part of National Grid)
2000 -      PG&E says to invest over $400 million to upgrade
         emissions at Salem Harbor
2001-3 -    PG&E considers shutting Salem Harbor due in part
         to high cost of cutting emissions. Ultimately,
         PG&E agrees to upgrade emissions but not before
         the PG&E National Energy Group subsidiary
         operating the plant goes bankrupt
2005 -      Dominion bought the station from US Gen New
         England Inc, a unit of PG&E's former bankrupt
         subsidiary
2010 -      Dominion says expects to shut Salem Harbor within
         seven years depending on U.S. EPA ozone
         regulations expected to go in effect in 2015-2017
2012 -      Dominion to install equipment to control mercury
         emissions 2015-2017 - Dominion could shut Salem
         Harbor depending on a number of factors, including
         the EPA's ozone emission rules and the value of
         ISO New England's forward capacity market
 (Reporting by Scott DiSavino in New York and Eileen O'Grady in
Houston; Editing by Walter Bagley)






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