Eastern Railroad Discussion > Who should pay for "surplus" coal fired electric plants?

The Wall Street Journal has an article today about proposals for financing older, less efficient (higher cost) coal plants which are no longer needed for regular and expected peak load situations.  This has a direct impact on rails and barges bringing coal to the plants.

The issue is older plants in Ohio which First Energy and American Electric Power no longer need for any but extreme weather.  The utilities propose to have rate payers pay to keep these plants available for extreme peak situations. The rate payers argue that the utility should pay for them as part of delivering reliable service.  A FE plant near Youngstown is in the cross hairs.

AEP won an earlier skirmish at Big Sandy in Kentucky. The company proposed closing down a large coal fired plant which was producing expensive electricity and needed considerable upgrading to meet current EPA requirements.  Kentucky legislators complained, and demanded AEP divide the cost of the upgrades over its KY OH WV IN and IL rate payers. Legislators from those states objected. AEP asked the people of KY if they would pay an additional $12 a month for coal electric, and they said no. The plant closed.

Spare electricity

Why should I pay???   They are a private business.  GM or Ford doesn't charge customers extra to keep  parts "just in case".  Keep putting up those wind turbines and solar panels.  Nothing says 20th Century like "Coal Fired".

Tominde Wrote:
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> Why should I pay???   They are a private
> business.  GM or Ford doesn't charge customers
> extra to keep  parts "just in case".  Keep
> putting up those wind turbines and solar panels. 
> Nothing says 20th Century like "Coal Fired".

You obviously haven't bought replacement parts for a car.  Your $35,000 sedan would cost much more to buy in pieces and assemble yourself. 

Let the "greenie-weenies" lose their electricity, when there is no sun or wind.  Dark hot/cold homes  or much higher electric rates might sink into their heads.

trainman630 Wrote:

> You obviously haven't bought replacement parts for a car.  Your $35,000 sedan would cost much more to buy in pieces and assemble yourself. 

On the contrary.   I drive a 93 Honda. I am very familiar with replacement parts.

Tominde Wrote:
-------------------------------------------------------
> Why should I pay???   They are a private
> business.  GM or Ford doesn't charge customers
> extra to keep  parts "just in case".  Keep
> putting up those wind turbines and solar panels. 
> Nothing says 20th Century like "Coal Fired".

I would expect that you will not complain when a lack of generating capacity results in brown outs 

MEKoch Wrote:
-------------------------------------------------------
> Let the "greenie-weenies" lose their electricity,
> when there is no sun or wind.  Dark hot/cold
> homes  or much higher electric rates might sink
> into their heads.

I don't think there's a lot of greenie-weenies in Eastern Kentucky that voted against the coal plant.

Read an article that mentioned the Power Plants were often fully compliant with the current EPA regs, after spending a lot of money on scrubbers and special blends of coal and all that goes with it. So the compliant plants were expensive but making money, now they are non-compliant and a total loss.

Apparently some of the structures could be retro-fitted for natural gas. But the concept of solar panels and wind turbines created a short duration surge market that modern Natural Gas plants located near pipelines and transmission lines fit into better than retro-fitted coal plants.

The clear winner turned out to be the builders of the new plants, not the consumer or the power company, but the actual construction contractors building the new plants.

Answer me this, aren't the windmills and solar panels that we see paid for by some kind of goverment subsidy?
 
It sure seems funny that there was a glut of windmill farms going up a few years ago and I haven't see such activity since. My guess is that the glut was with subsidy money and once that ran out, no utility wants to pay for windmills.

My final point is that if the windmills and solar are paid for with tax dollars, why can't these power plant upgrades be paid for in the same way?



Edited 3 time(s). Last edit at 11/17/15 03:34 by RockIsland4310.

> Why should I pay??? They are a private business. 

Regulated utilities in this country are in a category by themselves. The state government grants them a monopoly, requires preapproval of their capital expenditures, and sets the maximum prices for their services through a complicated process. This doesn't happen for Apple or General Electric. When the states created the concept of regulated utilities, in effect they brokered a deal between private investors who get an attractive but not excessive rate of return on their investments and citizens who get dependable energy under standardized terms at reasonable rates. Well, that's that's the theory and it has worked fairly well in practice. However, there have been difficult moments. Funding of nuclear power plants and remediation of environmental damage, for example. And now there's the question of stranded investment in other kinds of generating plants. 

> My final point is that if the windmills and solar are paid for with tax dollars, why can't these power plant upgrades be paid for in the same way?

In a few cases there have been direct cash outflows from governments to subsidize renewable energy outright. In more cases it's a question of tax credits. Either way, the citizens pay. And when regulated utilities are allowed to recover costs from ratepayers, the effect is the same: citizens pay. You could even go farther and say that since most regulated utilities are owned by private individuals or intermediaries like pension funds, mutual funds, etc for benefit of private individuals, citizens pay when regulated utilities must "eat" certain costs. So at the end of the day, you and I pay. The only questions are how much and through what vehicle. Of course, those questions are political by their very nature.



Edited 4 time(s). Last edit at 11/17/15 05:29 by ctillnc.

To 'ctillnc' Thank you, I appreciate that information. Years ago, when we were young and had little money to invest, what we could invest we put most into our local power company. Part of the logic was to get a bit back from the electric bill. We sort of ignored the investment while the power company changed names, merged, built additional coal fired units at one location, which helped my employer, a railroad. Then later it changed  a nearby plant from coal to natural gas, removing a weekly unit coal train from my railroad. Meanwhile the stock rose as we had a dividend re-investment plan. When it came time for my son to go to a more expensive out of state college we started selling that power company stock to help pay for that. We still have a bit left. Our utility has done some things others complain about including involvement in 'green' energy. My state has a steady source of wind energy offshore, but the 'greenies' fight that too as it will ruin their view from the beach, which I do not understand since you can't see a Suezmax tanker when it is where the wind farm would be. I pay $90-$150 electric in a split level house that was built before they insulated the outside walls. Can't complain. And 'ctillnc' is absolutely right, the consumer will end up paying somehow. So if that bothers you, buy some power company stock and own a piece of that power pole.

At least one deactivated coal fired plant will get quite a unique reuse.

http://www.datacenterknowledge.com/archives/2015/06/24/alabama-power-plant-to-be-converted-to-google-data-center/

And while driving through Coralville, IA this past summer, I came across this clever reuse of a former generating station.

http://www.iowariverpower.net/

Southern California Edison (SCE) is still trying to stick us ratepayers with the hefty decommisioning costs associated with the San Onofre Nuclear Generating Station (SONGS).   And this is on top of the decommisioning charge we all have been paying in our monthly electric bill since the station went online. 

It's like Las Vegas, the house never loses.

http://www.latimes.com/business/la-fi-san-onofre-dispute-20150419-story.html

d.

In the UK recently, the wind died down and went from 13% of power to .5% of power. So they went to start the peaker plants, but guess what, they hadn't been maintIned and would not start. So they switched off a lot of businesses in London. The next day there was a run on diesel generators...

233 coal plants are coming out of service in the US in 2016 alone, one fifth of the total.

Posted from iPhone

There are many users of electricity in the UK that are on a favorable tariff providing they shed load when required by NGC. This is not new, and goes back to pre privatisation days. Most peak lopping generation in the UK is handled by pump storage & extremely reliable. There are no standby coalplants in the UK, all run at base load or reduced load for frequency control. Keeping shutdown coal plants on long term cold storage is never a good idea. Plenty of notice is required to bring back on line, and usually followed by tube leaks and other breakdowns. Chris uk.

55002 Wrote:
-------------------------------------------------------
> Keeping
> shutdown coal plants on long term cold storage is
> never a good idea. Plenty of notice is required to
> bring back on line, and usually followed by tube
> leaks and other breakdowns.

That's what I was thinking re: using idle coal plants as peaking units. Unless the units are kept warm somehow, it would be like pulling a cold steam locomotive off the deadline at noon and expecting it to be ready to pull freight at 1:00.



Edited 1 time(s). Last edit at 11/17/15 09:47 by CPR_4000.

CPR_4000 Wrote:
-------------------------------------------------------
> 55002 Wrote:
> --------------------------------------------------
> -----
> > Keeping
> > shutdown coal plants on long term cold storage
> is
> > never a good idea. Plenty of notice is required
> to
> > bring back on line, and usually followed by
> tube
> > leaks and other breakdowns.
>
> That's what I was thinking re: using coal plants
> as peaking units. It would be like pulling a cold
> steam locomotive off the deadline at noon and
> expecting it to be ready to pull freight at 1:00.


One of the practical issues here may be that the plants haven't been fully amortized yet. So, pulling them down for good would cause financial consequences which could be stuck to the rate payers.  If that's the case, then the regulators would want the delays in permanent closure.

Ohio could resolve some of the problem by allowing more merchant power (purchased power available at "market" price) to flow into the state.  Which would make the supply end of the electric bill yo-yo up and down, but it would eliminate brownouts due to no power.  Problems with the in-state grid are a different matter.

http://www.telegraph.co.uk/comment/12009962/The-UKs-energy-policy-is-an-act-of-national-suicide.html

55002 Wrote:
-------------------------------------------------------
> There are many users of electricity in the UK that
> are on a favorable tariff providing they shed load
> when required by NGC. This is not new, and goes
> back to pre privatisation days. Most peak lopping
> generation in the UK is handled by pump storage &
> extremely reliable. There are no standby
> coalplants in the UK, all run at base load or
> reduced load for frequency control. Keeping
> shutdown coal plants on long term cold storage is
> never a good idea. Plenty of notice is required to
> bring back on line, and usually followed by tube
> leaks and other breakdowns. Chris uk.