Luminant restarts 3 Texas coal-fired units as power prices rise

HOUSTON Tue Feb 4, 2014 5:02pm EST

HOUSTON Feb 4 (Reuters) - Luminant, the largest owner of power plants in Texas, said it will restart three coal-fired plants ahead of schedule as rising natural gas prices boost the cost of wholesale power which makes coal units more economical to run.

Luminant notified the state grid operator that the 750-megawatt Martin Lake 3 coal unit and the 565-MW Monticello 1 coal unit will be available beginning Feb. 15, followed by the 565-MW Monticello 2 unit on March 1.

"It shows that in a commodity market - like ERCOT is - as a generator you need to be nimble and flexible so you can be able to bring these units up in a matter of days," Luminant spokesman Brad Watson said on Tuesday.

Luminant suspended operation of the Monticello units after the peak summer season last year and the Martin Lake unit in mid-December, citing low wholesale power prices.

The units were expected to remain shut until late May, restarting just ahead of the summer season when electric demand in Texas soars to keep air conditioners running, according to earlier filings with the Electric Reliability Council of Texas (ERCOT).

North Texas power prices averaged nearly $44 per megawatt hour in January, up 51 percent from the January 2013 average and 22 percent above the region's five-year average, according to Reuters data.

A series of winter storms across much of the country has increased the cost of natural gas and coal.

The relative price difference between Appalachian coal and Henry Hub gas on the futures market has widened to more than $3 per million British thermal units for the first time since February 2010, according to Reuters data, meaning more utilities may run their coal units more if gas prices stay high.

Dallas-based Luminant is a unit of Energy Future Holdings, which is owned by a group of private equity firms led by Kohlberg Kravis Roberts & Co.

FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article