THE BIG PICTURE: Economic and Workforce Contributions
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DOE Grid Study Points Finger at Natural Gas
In a long-awaited study of electricity markets and grid reliability, the Department of Energy has called out natural gas as the No. 1 reason for retirements of coal and nuclear plants, breaking from the Trump administration’s prior talking point blaming regulations and renewables for the nation’s shrinking coal and nuclear fleets.
The report attributes four factors to the increase in coal and nuclear retirements: low-cost natural gas; low growth in electricity demand; an increase in variable renewable energy (VRE); and regulatory compliance.
“The biggest contributor to coal and nuclear plant retirements has been the advantaged economics of natural gas-fired generation,” the report says, noting that natural gas surpassed coal as the largest source of electricity generation in the U.S.
The study goes on to conclude that: “The increased use of natural gas in the electric sector has resulted in sustained low wholesale market prices that reduce the profitability of other generation resources important to the grid. The fact that new, high-efficiency natural gas plants can be built relatively quickly, compared to coal and nuclear power, also helped to grow gas-fired generation.”…
Mississippi Power Will Absorb Costs for Failed Kemper Gasification Project
A settlement Mississippi Power reached on August 21 with stakeholders of the Kemper County facility will ensure customers won’t be subjected to rate increases associated with the now-abandoned gasification portion of the project. While that will affect revenues, the resolution could soften controversy surrounding the project and avoid protracted legal and financial turmoil, the company said.
Mississippi Power reached the settlement with Denbury Resources—the company under contract to buy all the project’s captured carbon, and which had already built a 61-mile carbon dioxide pipeline—along with three advocacy groups: the Central Mississippi Building and Construction Trades Council, the East Mississippi Business Development Corp., and the Ministerial Alliance Partnership.
It essentially provides that the annual revenue requirement—which is necessary to cover the power company’s expenses and have the opportunity to earn a fair rate of return—for the 2018 Kemper IGCC–related costs would be $ 126 million, resulting in no rate increase for customers now or in the future. It also proposes to modify the project’s 2010-awarded certificate of public convenience and necessity to limit the facility to operations of the natural gas combined cycle power plant, which was completed in 2014.…
Calpine Announces $5.6 Billion Sale to Equity Group
Houston-based Calpine Corp., which confirmed in July it was looking for a buyer, announced August 18 it has agreed to be bought by Energy Capital Partners (ECP) in a $ 5.6 billion deal.
ECP is a private equity firm that focuses on investments in North American energy infrastructure. The purchasing group also includes a consortium of investors led by Access Industries, a New York City-based holding company, and the Canada Pension Plan Investment Board. The deal is expected to close early next year, according to the companies.
“We are excited to partner with Energy Capital,” said Thad Hill, Calpine’s president and CEO, in a statement after the deal was announced. “With ECP, Calpine will be able to operate as it always has, executing on our strategic objectives of providing safe and reliable power and serving our retail and wholesale customers with differentiated products and services.”
Calpine in July confirmed that it was looking for a buyer, two months after reports surfaced that the company was working with investment bankers to facilitate a sale.…
Georgia PSC Signals Support Continuing Vogtle Expansion
In two actions on August 15, the Georgia Public Service Commission (PSC) signaled its support for the Vogtle nuclear expansion project, provided it can be done economically,
Georgia Power must show revised cost and schedule estimates to finish the costly Vogtle nuclear expansion as well as indicate whether it intends to finish the much-delayed construction project in its next construction monitoring report, which is due on August 31, one motion requires.
The PSC voted 4–1 on the motion put forth by Commission Chairman Stan Wise. The motion also requires Georgia Power to address whether the commission should approve revisions to project costs and schedule.
“This vote today sends a message to the Company, the Company’s partners, ratepayers, and Wall Street that the Commission continues to be supportive of this project provided it can be done economically,” Chairman Wise said in a statement. “This information will help us in deciding the appropriateness of whether this project should go forward or not go forward.”…
Operator Reverses Course, Will Keep Running Montana Coal Plant
The operator of one of the largest coal-fired power plants in the Western U.S. will continue to run the facility, changing course about a year after a company executive said the plant was not economically viable.
A spokesman for Talen Energy confirmed to POWER on August 9 that the company will continue to operate the 2,094-MW Colstrip Generating Station in Montana. The company last year told the ownership group it would need to find a new operator by mid-2018.
Todd Martin, a spokesman for Talen, told POWER in an email: “I can confirm that the ownership group has determined that Talen Montana will continue to operate the Colstrip Station.” He said the company would have “no additional public information to share at this time.”
The Billings (Mont.) Gazette first reported August 9 that Colstrip would remain open, based on its interviews in the past week with representatives of the six utilities that co-own the plant.
Montana legislators earlier this year approved a deal that would allow Pennsylvania-based Talen to borrow up to $ 10 million a year to keep the plant operating until 2022.…