Two Salem Harbor coal units shut, two more to go

The coal-fired Salem Harbor Units 1 and 2 were retired as planned on Dec. 31, 2011, with the other two coal units at the plant to still be retired in mid 2014, said Dominion Resources (NYSE:D) in its Feb. 28 annual Form 10-K report.

During the second quarter of 2011, Dominion announced its intention to retire the 515-MW, coal-fired State Line plant in Indiana by mid 2014 and to retire two of the four units at the 314-MW Salem Harbor by the end of 2011 and the remaining two Salem Harbor units on June 1, 2014. The two recently-retired Salem Harbor units total 163 MW of capacity.

These retirement decisions were prompted by the economic outlook for both plants, in combination with the expectation that State Line would be impacted by potential environmental regulations that would likely require major capital expenditures. During the third quarter of 2011, Dominion announced an accelerated schedule for State Line, with the facility to be retired in the first quarter of 2012, given a continued decline in power prices and the expected cost to comply with environmental regulations.

During March 2011, Dominion determined that it was unlikely that State Line would participate in the May 2011 PJM capacity base residual auction that would commit State Line’s capacity from June 2014 through May 2015. This determination reflected an expectation that margins for coal-fired generation will remain compressed in the 2014 and 2015 period in combination with the expectation that State Line may be impacted during the same time period by environmental regulations that would likely require significant capital expenditures.

In June 2010, the Conservation Law Foundation and Healthlink Inc. filed a complaint in the District Court of Massachusetts against Dominion Energy New England Inc. alleging that Salem Harbor Units 1-4 have been and are in violation of visible emissions standards and monitoring requirements of the Massachusetts State Implementation Plan and the station’s state and federal operating permits. In February, the court entered a consent decree among the parties under which Dominion will retire Salem Harbor.

Dominion Resources also noted how its Virginia Electric and Power Co. (Virginia Power) regulated utility, which does business in Virginia as Dominion Virginia Power, is working toward more reliance on low-emissions generation. In that area, Virginia Power’s recent moves include:

  • Virginia Power completed construction of the 590-MW, gas-fired Bear Garden facility in May 2011.
  • Virginia Power is constructing the natural gas-fired Warren County power station. In connection with the air permit process for Warren County, Virginia Power reached an agreement with the National Park Service to permanently retire the North Branch power station, a 74-MW, coal-fired plant located in West Virginia that is currently on cold reserve status, once Warren County begins commercial operations. Warren County is expected to generate more than 1,300 MW when operational. In February, the Virginia State Corporation Commission authorized the construction of this power station, which is estimated to cost about $1.1bn, excluding financing costs. Commercial operations are scheduled to commence by late 2014.
  • Virginia Power plans to construct an additional combined-cycle natural gas-fired plant similar in size to Warren County to replace coal-fired units at the Chesapeake and Yorktown plants that are anticipated to be retired in 2015 and 2016.
  • Virginia Power has received an early site permit from the Nuclear Regulatory Commission for the possible addition of approximately 1,500 MW of nuclear generation in Virginia. Virginia Power has not yet committed to building a new nuclear unit.
  • Virginia Power plans to convert three small coal-fired Virginia plants to biomass. The conversions of the Altavista, Hopewell and Southampton County plants would increase Dominion’s renewable generation by more than 150 MW and are expected to cost approximately $165m, excluding financing costs. After approvals by the Virginia Department of Environmental Quality and the Virginia State Corporation Commission, construction will begin, with the conversions expected to be complete by the end of 2013.

While Virginia Power’s new coal-fired Virginia City Hybrid Energy Center, which is nearing completion in southwest Virginia, will be a new source of greenhouse gas emissions upon entering service, Virginia Power has taken steps to minimize the impact on the environment. The new plant is expected to use at least 10% biomass and is designed to be carbon-capture compatible. Also, Virginia Power has announced plans to convert its coal units at the Bremo plant to natural gas, contingent upon the Virginia City plant entering service and receipt of necessary approvals.

Virginia City, located in Wise County, is expected to generate about 585 MW when completed. The baseload facility is estimated to cost $1.8bn, excluding financing costs. Construction was approximately 95% complete at the end of 2011 and commercial operations are expected to commence in the summer of 2012.

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.