State Line plant shuts as coal pile runs out

The State Line Energy LLC unit of Dominion Resources (NYSE: D) filed a FERC a notice of cancellation on April 19 for State Line’s Single Market Based Rate Tariff due to the shutdown of the coal-fired State Line plant in Indiana.

State Line Energy owns a 515-MW, coal-fired facility that is located in the Commonwealth Edison control area and is connected to the PJM Interconnection LLC system. It is comprised of Units 3 and 4. Unit 3 was placed into service in 1955 and Unit 4 was placed into service in 1963.

“State Line is deactivating units three and four and will no longer generate power because of the continued erosion of market conditions coupled with its inability to comply with the environmental restrictions imposed on the station by the U.S. Environmental Protection Agency’s Cross-State Air Pollution Rule, as issued on July 7, 2011,” said the letter. “State Line’s power sales are made solely into PJM’s capacity and energy markets and State Line has complied with all obligations under the PJM Open Access Transmission Tariff with respect to notifying PJM and the PJM Market Monitor regarding the deactivation of these units, withdrawal from the PJM markets, and termination of its power sales.”

State Line is an Existing Generation Capacity Resource located in the PJM Region and timely notified PJM and the PJM Market Monitor of its intent to deactivate the units, the company noted. PJM informed State Line that the deactivation raised no reliability concerns in the PJM region and in the NIPSO transmission zone, which is a part of the Midwest ISO. The PJM Market Monitor raised no concerns with the withdrawal from the PJM capacity and energy markets.

Although State Line Energy provided a timely notification to PJM of an expected time frame for deactivation, the actual date could not be determined until all coal at the plant was consumed. State Line initially provided PJM with weekly updates on the process of consuming the remaining coal pile, and later daily projections of a refined shutdown date as the coal pile was close to depletion. The final day of operation was March 25.

Said Dominion in its Feb. 28 Form 10-K annual report: “During the second quarter of 2011, Dominion announced its intention to retire State Line by mid-2014 and to retire two of the four units at Salem Harbor by the end of 2011 and the remaining two Salem Harbor units on June 1, 2014. These decisions were prompted by the economic outlook for both facilities, in combination with the expectation that State Line would be impacted by potential environmental regulations that would likely require significant 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. Salem Harbor units 1 and 2 were retired as planned on December 31, 2011.”

U.S. Energy Information Administration data shows the State Line plant taking coal last year from the North Antelope Rochelle mine of Peabody Energy (NYSE: BTU) and the Black Thunder/Jacobs Ranch mine of Arch Coal (NYSE: ACI), both of which are in the Wyoming end of the Powder River Basin.

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.