September 17, 2013 / 9:04 PM / 6 years ago

Luminant to shut 3rd Texas coal unit, citing low power prices

HOUSTON, Sept 17 (Reuters) - Luminant, the largest owner of power plants in Texas, said on Tuesday that it plans to suspend operation of three coal-fired plants, totaling 1,880 megawatts over the winter, citing increased challenges from declining wholesale power prices.

Dallas-based Luminant said it filed a 90-day notice with the state grid operator requesting to shut its 750-MW Martin Lake 3 coal unit by mid-December.

Two units at Luminant’s Monticello power plant in Rusk County are already scheduled to shut Oct. 1, according to a notice from the Electric Reliability Council of Texas (ERCOT).

“We want to operate as much of our generation as we can, but it does not make economic sense to operate a unit at a financial loss,” Luminant spokeswoman Meranda Cohn said in a statement.

Texas regulators are working to raise wholesale power prices in the $29 billion electric market.

Overall, electric use in Texas is growing faster than generation is being built, shrinking the state’s reserve margin and increasing the prospects for rolling outages in future years.

Next year, Martin Lake 1 and 2 will operate year-round and Martin Lake 3 will operate from June to September, Cohn said.

NRG Energy also plans to shut another 760 MW at its Bertron power plant near Houston over the winter when power demand is low.

If approved by ERCOT, Luminant’s request will bring the total number of megawatts “mothballed” for the winter to 2,600. Anther 2,000 MW in ERCOT is mothballed year round, according to ERCOT data.

A mothballed plant can be restarted, but may require weeks or months of advance notice.

Earlier this month, ERCOT meteorologist Chris Coleman said he expects a warmer-than-normal winter across Texas, with the best opportunity for cold weather to come late in the season.

Even without Martin Lake 3, ERCOT would have generation of 74,400 MW for the winter season.

One megawatt will supply about 500 Texas homes during mild weather and about 200 homes during peak summer demand.

In its preliminary winter report, ERCOT said peak demand over the winter would not exceed 48,000 MW, nearly 6 percent below the 2012 winter peak seen in January of 50,665 MW and 16 percent below ERCOT’s record winter peak of 57,265 MW set during a brutal statewide cold spell in February 2011.

After typical maintenance and forced power-plant outages totaling 5,600 MW, ERCOT said it would expect to have more than 20,000 MW of available capacity. Extreme weather or extreme generation outages could reduce that reserve.

ERCOT will update its winter forecast on Nov. 1.

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

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