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Mississippi PSC: Kemper Facility Should Operate Using Only Natural Gas

June 25, 2017

The Mississippi Public Service Commission (MPSC) at an open meeting on June 21 unanimously passed a motion instructing its counsel to prepare an order pursuing potential solutions regarding the Kemper County Power Generation Facility.

In a press release, the MPSC said the “Kemper Facility should operate using only natural gas.” The commission said it wanted to remove risk from ratepayers for the lignite coal gasifier and related assets, and ensure no further rate increases were incurred by Mississippi Power Co. customers. (In fact, the commission strongly encouraged rate reductions, particularly for residential customers.)

Mississippi Power issued a statement on the MPSC decision. It said, “The PSC provided several guidelines to consider for the negotiations, including the possibility of the project only operating as a natural gas-fueled combined cycle plant. We expect the process for any negotiations and this new docket will be formally addressed as part of a proposed order the Commission will consider at their July 6 meeting. We look forward to reviewing the order.”…

Report: Cheap Natural Gas Poised to Roil PJM Power Market

May 13, 2017

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The flood of cheap Marcellus Shale gas driving massive construction of new natural gas power generation capacity could wreak havoc in the PJM power market, Moody’s Investors Service suggests in a new report.

Two of the nation’s largest power markets, Texas and California, already pose a “distressed environment” for unregulated power companies owing to declining market prices, the credit ratings agency said. Now, a glut of new gas generation in PJM—where new plants are expected to add up to 100 TWh, boosting gas power capacity 25%, by 2021—is poised to increase supply “amid little prospect of growth in demand,” it said.

The agency noted that PJM’s latest forecast report indicates load growth has declined over the last decade, with system load falling to 790 TWh in 2015 from 822 TWh in 2005. Peak demand has also fallen to 143 GW in 2015 from 154 GW in 2005. “Over the past few years PJM has also repeatedly cut its forecasts, and the grid operator currently projects weather-adjusted peak demand growth of only 0.2% per year over the next 10 years,” the report says.…

Struggling to Compete with Natural Gas, Pennsylvania Coal Plant Files for Bankruptcy

January 14, 2017

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Homer City Generation, operator of a three-unit, 1,884-MW coal-fired generating station about 45 miles northeast of Pittsburgh, Pa., has initiated a voluntary, pre-packaged Chapter 11 case in the U.S. Bankruptcy Court for the District of Delaware.

The financial restructuring process is expected to eliminate more than $ 600 million in existing secured debt from Homer City’s balance sheet and provide for an orderly transition of ownership, according to the company. The plant expects to continue operating, and to meet its ordinary obligations, as the case proceeds.

Filing a pre-packaged Chapter 11 case means the company has already arranged the necessary approvals for its proposed plan of reorganization. By doing so, the company is able to expedite the process, while eliminating some of the uncertainty.

Homer City has been struggling due to depressed power market prices, resulting from the low cost of natural gas. Located virtually in the center of the Marcellus Formation, Homer City’s finances have been doomed by the abundance of natural gas, combined with higher environmental compliance costs.…

Natural Gas and Wind Are Cheapest Sources of Power in Majority of U.S.

December 12, 2016

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In a finding that is likely to boost controversy over the future of U.S. energy policy, a comprehensive study of the full levelized cost of energy (LCOE) from various sources of electricity conducted by the University of Texas (UT) at Austin’s Energy Institute found that wind turbines and natural gas combined cycle power plants (CCPPs) provide the least expensive options for new generation across a large majority of U.S. counties.

The study, “New U.S. Power Costs: By County, with Environmental Externalities,” is part of an ongoing initiative at UT that attempts to take a “holistic approach” to calculating both direct and indirect costs of generating electricity.

The Institute has placed the results online in the form of an interactive tool that allows comparison of the LCOE for various options and adjustment of fuel costs. (The tool also makes some assumptions about the suitability of certain generation in various locations; for example, there are areas that would be unsuitable for fossil plants for environmental reasons.)…

Coal-Fired Generation Projected to Surpass Natural Gas This Winter

November 24, 2016

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Coal, the unchallenged leader in U.S. power generation for most of the past century, may regain its place at the top of the energy mix hierarchy this winter, according to projections released by the U.S. Energy Information Administration (EIA).

The EIA’s November Short-Term Energy Outlook suggests that prices for natural gas delivered to the power sector will continue rising, resulting in gas-fired generation reaching a seasonal peak of nearly $ 31/MWh in February 2017. That’s a far cry from the low recorded in March 2016 of about $ 16/MWh.

Increased gas prices would be a favorable development for the coal power sector. The national average price for power generated by coal has been between $ 21/MWh and $ 23/MWh for the past couple of years, making it the more economical choice.

As recently as 2010, coal supplied nearly twice the electricity generated from gas. However, falling gas prices as a result of the shale boom and coal plants closing due to more stringent environmental regulations have changed the landscape substantially.…