PacifiCorp of Portland, Ore., has closed Unit 3 of the elderly Naughton coal-fired generating plant in Kemmerer, Wyo., taking 384 MW of power out of service at the three-unit, 832-MW station. The unit went into service in 1971. The first 192-MW unit went into service in 1963.
Economics are the culprit in the Naughton closure. Cheap, available natural gas, low cost renewables, and the need to add NOx control technology undermined the plant’s economic rationale. Contributing to the difficulties is the Chapter 11 bankruptcy of Westmoreland Coal Co., which owns the mine-mouth Kemmerer mine that supplies the plant’s fuel. Westmoreland filed for bankruptcy protection last fall. Closing the Kemmerer mine is part of its restructuring plan.
In January, Westmoreland sought bids on all of its assets, but got no takers beyond a minimum bid from the company’s creditors.
Westmoreland’s financial difficulties have also hit Montana’s four-unit, 2094-MW Colstrip generating station. Talen Energy, Puget Sound Energy, Portland General Electric, Avista, PacifiCorp, and Northwestern Energy jointly own Colstrip, located in the Montana portion of the coal-rich Powder River Basin.
Colstrip could see its coal supply contracts for some 10-13 million tons per year vanish if the coal-supply contracts become invalidated. POWER magazine reported that Talen told the bankruptcy court last month that Westmoreland is trying to “squeeze” Colstrip “for greater and greater profits,” noting that the fuel supply contracts guarantee a Westmoreland profit: they are “cost-plus agreements under which the play plays the annual cost of mining operations, a return on capital investment, and a per-ton profit fee.”
In New Mexico, the state Public Regulation Commission voted 5-0 last week to start public hearings on the plan of Public Service Co. of New Mexico (PNM) to shut the remaining two units of the four-unit San Juan Generating Station near Farmington. The utility had asked the regulators to delay hearings until mid-2019, arguing that the final units of plant were not scheduled to close until June 2022.
The Albuquerque Journal reported that the commission’s general counsel, Michael Smith, told the regulators, “The commission is required to have an abandonment proceeding. It’s our obligation to provide notice to the public and allow parties to intervene in opposition or support with a public hearing.”
There is also a bill pending in the legislature, backed by PNM, to help the company finance the closure and provide some relief for the economic impact on the local communities. It would allow PNM to sell bonds, which customers would pay for in their electric rates, so that the company could recover 100% of its investment in the plant. Environmental groups, the newspaper reported, are divided on the legislation. Some support it because it would help PNM finance renewable energy as a replacement. Others regard it as an unwarranted bailout.
PNM closed two units (units two and three, commissioned in 1976) of the 1848-MW generating station in 2017. The company said at the time that it would close unit 1 (369-MW, commissioned in 1973) and unit 4 (555-MW, commissioned in 1982) in 2022.
— Kennedy Maize