Coal Is on the Way Out at Electric Utilities, No Matter What Trump Says
WASHINGTON — In Page, Ariz., the operators of the Navajo Generating Station, the largest coal-fired power plant in the West, have announced plans to close it by 2019. The electric utility Dayton Power & Light will shut two coal plants in southern Ohio by next year. Across the country, at least six other coal-fired power plants have shut since November, and nearly 40 more are to close in the next four years.
President Trump campaigned on a pledge to restore the limping American coal industry, vowing to bring jobs and production back to a sector that has been on a steady decline for over a decade. But to do that, he would have to revive demand for coal by electric utilities, which for decades have been the largest consumer of the heavily polluting fuel. Nearly all the coal mined in the United States generates electricity.
On March 28, Mr. Trump headed to the Environmental Protection Agency, where, flanked by coal miners and coal company executives, he signed an executive order directing the agency’s administrator, Scott Pruitt, to begin rolling back a set of regulations on coal-fired power plant pollution that made up the centerpiece of President Obama’s climate change legacy.
“Today I’m taking bold action to follow through on that promise,” Mr. Trump told the miners. “My administration is putting an end to the war on coal.”
But executives at the nation’s largest electric utilities say Mr. Trump’s announcement and the eventual fate of the regulations known as the Clean Power Plan make little difference to them. They still plan to retire coal plants — although perhaps at a slightly slower pace — and, more significant, they have no plans to build new ones.
“For us, it really doesn’t change anything,” said Jeff Burleson, vice president of system planning at Southern Company, an Atlanta-based utility that provides electricity to 44 million people across the Southeast, of the prospective rollback of the Clean Power Plan. “Whatever happens in the near term in the current administration doesn’t affect our long-term planning for future generation,” he said.
As do most electric utilities, Southern Company plans its investment on a 50-year horizon, the expected life span of a new power plant. Its planners do not see coal as economically viable in that time frame.
With or without the Clean Power Plan, power companies say, coal is simply no longer the fuel of choice for keeping the lights on in America — and they do not expect it to make a comeback. Cheaper natural gas and renewable sources like wind and solar power have replaced it.
“We’ll continue to grow the renewables portion of our business and meanwhile rely on natural gas, but we don’t see investing in new coal,” Mr. Burleson said.
A decade-long boom in extracting gas and oil from rock in a process called hydraulic fracturing, or fracking, has led to a glut in natural gas, causing its price to plummet below that of coal. Electric utilities have turned away from buying coal and toward the cheaper fuel, a market shift was already underway well before Mr. Obama announced the Clean Power Plan.
“This is not an environmentally driven trend we are seeing,” said Jairo Chung, an associate vice president at Moody’s Investors Service. “What we are seeing now is in the interior of the U.S., where wind is very rich, states and utilities are pushing ahead in investing in it — not because of regulation or environmental concerns, but because it’s economically driven.”
Natural gas produces just half as much planet-warming carbon dioxide pollution as coal — an additional benefit, electricity generators say, as they invest in the new power generators that will provide electricity to America for the next half-century.
This decision is also driven by economics. Electric company executives are including in their long-term profit-and-loss calculations an expectation that the federal government will eventually tax or regulate carbon dioxide pollution.
Several electric utilities, including Southern Company of Atlanta, have already incorporated an anticipated carbon tax into their business models, plugging in estimated fees of $10 to $40 per ton of carbon dioxide pollution. “We don’t know exactly what the future holds, but we hold a presumption that there will be a price on carbon on the horizon, either from legislation or regulation,” Mr. Burleson said.