Luminant delays plan to shut two Monticello coal units

Electric Reliability Council of Texas (ERCOT) CEO Trip Doggett reported to the council that a federal court’s stay of the Cross-State Air Pollution Rule (CSAPR) on Dec. 30, 2011, resulted in Luminant’s decision not to mothball two units at the coal-fired Monticello plant, ERCOT said in a Jan. 18 statement. 

Luminant had previously announced plans to suspend services at two of the plant’s units, totaling 1,130 MW, to comply with the rule, which was made final by the U.S. Environmental Protection Agency in August 2011 and was slated for implementation on Jan. 1.  

After adding the 1,130 MW back into the generation mix expected for the summer of 2012, the reserve margin increased from 12.11% to 13.86% – slightly above the minimum reserve margin target of 13.75%. “We still anticipate a tight summer if the weather is as extreme as last summer,” Doggett said.  

Texas experienced its hottest recorded summer in 2011, causing record-setting electricity demand in five consecutive months, from May to September. ERCOT initiated emergency procedures due to low operating reserves on seven days but did not have to implement rotating outages to reduce the load, although interruptible loads – resources paid to be dropped in emergency conditions – were used two times during the summer. 

The U.S. Court of Appeals for the D.C. Circuit on Dec. 30 stayed CSAPR due to appeals filed by Luminant and dozens of other affected parties, including the state of Texas. The court plans to hear oral argument in the case in April and may issue a decision as soon as this summer.

“Today’s decision allows valued employees across our system to continue working on important generation, mining and other operations,” said Luminant in a Dec. 30 statement about the court-imposed stay. “It also allows Luminant’s Monticello units 1 and 2 to continue operating and providing needed generation for the Texas electric market. The company intends to continue closely evaluating business and operational decisions given that this stay does not invalidate the rule, but delays a decision on its implementation until a final court ruling is issued.”

The final rule’s reductions in NOx and SO2 emissions and tight compliance timeline forced Luminant to announce in September 2011 the expected layoff of 500 employees and the elimination of power generation that it said is sorely needed in the Texas electric market. In early October, the EPA acknowledged errors in the rule and announced proposed revisions. These proposed revisions came after Luminant, the state of Texas, numerous other companies and states, and other stakeholders pointed out serious flaws in the EPA’s methodology and process.

Under the plan announced in September, at the Monticello plant and supporting Thermo and Winfield lignite mines in northeast Texas, the following steps would be necessary: Monticello Units 1 and 2 would be idled; and Monticello Unit 3 would cease using Texas lignite and begin to operate on 100% lower-sulfur Powder River Basin (PRB) coal. Also, Big Brown units 1 and 2 would cease using Texas lignite and begin to operate on 100% PRB coal, meaning the adjacent Big Brown/Turlington lignite mine would cease production.

Also under the September announcement, at Monticello Unit 3 and two of Luminant’s other coal generating facilities, the Martin Lake and Sandow 4 power plants, the company would immediately begin a substantial investment program to upgrade the capabilities of existing environmental control equipment, install new environmental control equipment and implement programs to reduce emissions.

ERCOT manages the flow of electric power to 23 million Texas customers – representing 85% of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects 40,500 miles of transmission lines and more than 550 generation units.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.