UPDATE 1-Luminant to mothball 2 Texas coal units; winter demand seen up

Tue Sep 4, 2012 5:51pm EDT

* Two of three Monticello units to be mothballed

* ERCOT projects winter demand above Feb 2011 record

* ERCOT sees adequate generation for winter

HOUSTON, Sept 4 (Reuters) - Luminant, the largest electricity generator in Texas, plans to mothball the Monticello 1 and 2 coal-fired power plants in North Texas beginning in December for at least six months, the company said in a filing with the state grid agency.

The grid operator, the Electric Reliability Council of Texas (ERCOT), said on Tuesday it expects to have adequate generation for the winter season despite projecting a higher winter demand peak due to El Nino conditions.

"Our latest weather report indicates a growing El Nino and that typically is consistent with colder-than-normal conditions in the ERCOT region," said Warren Lasher, ERCOT's director of system planning, on a call with reporters.

In its preliminary winter report, ERCOT said peak demand over the winter could reach 58,138 megawatts, 1.4 percent above ERCOT's record winter peak of 57,315 MW set during a brutal statewide cold spell in February 2011 and more typical of demand seen on a warm May afternoon.

ERCOT said it expects to have more than 74,000 MW of supply from all sources over the winter. After typical maintenance and forced power-plant outages, ERCOT said it would expect to have about 8,300 MW of reserve generation as a cushion to avoid a blackout. Extreme weather or extreme generation outages could reduce that reserve.

In February 2011, extreme cold weather and high winds across the state knocked dozens of power plants offline, forcing ERCOT to implement rolling outages over several hours to prevent a major statewide blackout.

Luminant had planned to suspend operations at Monticello 1 and 2, each rated 583 MW, in 2012 in order to comply with the Cross-State Air Pollution Rule, which was thrown out by a federal appeals court in August. When a stay was issued in late 2011, Luminant continued to run the units.

If approved, Dallas-based Luminant said it would shut the two plants Dec. 1 for a period of six to seven months, according to a filing with ERCOT made late last week. Monticello 3, rated at 765 MW, will remain available.

A Luminant spokesman cited weak wholesale prices as a reason to mothball the units over the winter. Market comments are due Sept. 14.

ERCOT has already approved a request from NRG Energy to mothball two older natural-gas fired units, totaling 460 MW, at the S.R. Bertron station near Houston beginning Oct. 1, for an indefinite period.

Those units, Bertron 3 and 4, were mothballed last year, then restarted in June to help meet high summer demand.

According to an ERCOT report, more than 3,700 MW of generation will be mothballed over the winter, including Luminant's Monticello units.

Luminant is a unit of Energy Future Holdings which is owned by a group of private equity firms including Kohlberg Kravis Roberts & Co and TPG Capital Management.

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