American Electric Power (NYSE: AEP) said July 11 that it expects to retire its 585-MW coal-fueled Muskingum River Unit 5 in Beverly, Ohio, in 2015.
AEP said it reached an agreement with other parties in February to modify the company’s 2007 New Source Review Consent Decree and give AEP the option to retire Muskingum River Unit 5 or refuel it with natural gas. Due to the cost of compliance with environmental regulations and current market conditions, AEP decided that it is unlikely to make the capital investment to refuel the unit.
AEP said it will record a non-operating, pre-tax impairment charge for Muskingum River Unit 5 of $150m to $170m in the second quarter of 2013.
The cost to convert MR5 to natural gas and comply with the environmental rules affecting water usage at the unit would be approximately $61m, AEP said.
The company previously announced its intent to retire Muskingum River Units 1-4 (840 MW in total) in 2015. About 95 employees working at Muskingum River Plant Units 1-5 will be impacted.
AEP had also previously announced the planned retirement of 2,538 MW of coal-fueled generation owned by AEP Ohio in Ohio and West Virginia by the end of 2015. The addition of Muskingum River Unit 5 brings AEP Ohio’s total retirements to 3,123 MW. The remaining 10,725 MW of AEP Ohio-owned generation – including 2,427 MW slated to be transferred to AEP subsidiaries Appalachian Power and Kentucky Power following state regulatory approvals – will consist mostly of low-emitting, fully controlled coal-fueled plants, natural gas-fueled combined cycle and combustion turbines, and a small hydro plant.
U.S. Energy Information Administration data shows that coal suppliers to Muskingum River earlier this year included Southern Coal Sales and the McElroy longwall mine of CONSOL Energy (NYSE:CNX).
In an Environmental Compliance Plan filed April 15 at the Public Utilities Commission of Ohio, AEP Ohio said that it will retire about 1,900 MW of capacity by June 1, 2015. Furthermore, based on a February 2013 modification of a New Source Review (NSR) Consent Decree with the federal government, Muskingum River Unit 5 will be forced to stop burning coal by 2015; however, in lieu of retirement, the unit still has the option to be refueled with natural gas by Dec. 31, 2017, said the company at the time. The July 11 AEP announcement pretty much closes out that gas option.
The coal unit retirements by June 2015 as listed in the April 15 plan are:
- Kammer Units 1-3, West Virginia, 630 MW;
- Muskingum River Units 1-4, Ohio, 840 MW;
- Beckjord Unit 6, Ohio, 53 MW (AEP Ohio share of larger unit);
- Picway Unit 5, Ohio, 100 MW; and
- Philip Sporn Units 2 and 4, West Virginia, 300 MW.