July 11 (Reuters) - American Electric Power Co Inc said Thursday it expects to retire its 585-megawatt (MW) Unit 5 at the Muskingum River coal plant in Ohio in 2015 due to the high cost of complying with environmental rules and low power and natural gas prices.
AEP said in a release it reached an agreement with other parties in February to modify a 2007 deal to give AEP the option to retire Muskingum 5 or refuel it with natural gas.
But due to the cost of compliance with environmental regulations and current market conditions, AEP said it is now unlikely to make the capital investment to refuel the unit.
AEP said it will record a non-operating, pre-tax impairment charge for Muskingum 5 of about $150 million to $170 million in the second quarter of 2013.
The company said this charge will not impact its 2013 operating earnings guidance range of $3.05 to $3.25 per share, and AEP said it continues to expect to deliver an earnings growth rate of 4 to 6 percent based on 2013 operating earnings guidance.
The company previously announced its intent to retire Muskingum Units 1-4 (840 MW) in 2015. AEP said about 95 employees working at Muskingum will be affected.
AEP said it will work to provide displaced employees with opportunities at other AEP facilities.
AEP previously announced the planned retirement of 2,538 MW of coal-fueled generation owned by AEP Ohio in Ohio and West Virginia by the end of 2015.
Since President Barack Obama took office in 2009, about 15,000 MW of coal-fired power plants have closed as low electricity and natural gas prices have made it uneconomical for generating companies to upgrade those facilities to keep up with the government’s stricter environmental rules.
Those generating companies have also announced plans to shut more than 37,000 MW of coal-fired units over the next 10 years or so.
AEP said the addition of Muskingum River 5 brings AEP Ohio’s total retirements to 3,123 MW. The remaining 10,725 MW of AEP Ohio-owned generation - including 2,427 MW slated to be transferred to Appalachian Power and Kentucky Power following state regulatory approvals - will consist of coal and natural gas plants and a small hydro plant.