White House Clings to Coal as Plants Shutter in Texas

(CN) – Coal’s death knell is ringing in Texas as the state’s largest energy producer says it will close three coal-fired power plants in January, but the message isn’t getting through to the Trump administration, which is trying to revive the industry that some experts say is beyond redemption.

Rebecca Johnson-Vasquez owns Lonestar Guns and Goods in Rockdale, a town with a population of 5,600 halfway between Austin and College Station in Milam County.

She is also the chairman of the board for the Rockdale Chamber of Commerce.

She said Luminant Energy’s announcement last week that it plans to close the Sandow Power Plant in Rockdale in January and lay off 200 plant employees was totally unexpected.

“It’s awful. It’s devastating. It’s truly devastating,” she said.

When you add in the hundreds of subcontractors who worked at the plant, she said, it was the largest employer in the rural area. Other top employers in the area are two hospitals and Walmart, and many people make a living raising livestock or growing crops on their ranches.

She said Rockdale and Milam County will miss the good-paying jobs.

“Regular small business is a massive amount of our businesses here … And of course where does our business come from? It comes from employees that worked out there [at the power plant], a good part of it,” she said.

To give local residents some hope for economic viability amid the deflating news, Milam County officials early this week said they submitted a bid to Amazon, hoping to pique the e-commerce company’s interest in locating its second headquarters – which is expected to employ 50,000 people and break ground in 2018 – on 33,000 acres that Alcoa is selling near Luminant’s power plant.

“It seems a little out there as far as Milam County and not being a major metropolitan area, but we are in close proximity to, and in between, Houston, Austin, San Antonio and Dallas-Fort Worth,” Johnson-Vasquez said.

Milam County Judge Dave Barkemeyer – the county’s CEO, not a judicial officer – said at a news conference Tuesday at the county courthouse that the proposed Amazon headquarters site is within 60 miles of 2.5 million people and two research universities, and the area would afford Amazon employees a low cost of living without having to deal with city traffic, while giving Amazon plenty of room to expand its operations, according to local news reports.

Vistra Energy, Luminant’s parent company, also operates Texas power plants fueled by natural gas and nuclear power. Its plants have the capacity to generate 18,000 megawatts of energy, 8,000 of which come from coal. Its subsidiary TXU Energy sells electricity to around 1.7 million homeowners and businesses.

One megawatt of electricity can power 200 homes during peak demand – in Texas, the hot summer when air-conditioning units are incessantly running – and about 500 homes during milder weather.

In addition to closing the Sandow Power Plant, Vistra also said last week that it plans to close two other coal-fired power plants in Central Texas in January.

Six hundred plant employees will be laid off and another 250 who work for Vistra at a coal mine in Bastrop County, near Austin, will lose their jobs, and the plants’ generating capacity of 4,100 will be taken offline, the company announced last week.

Vistra’s plan to close the coal plant in Milam County surprised locals, but its CEO said the company’s been facing this prospect for years.

“Though the long-term economic viability of these plants has been in question for some time, our year-long analysis indicates this announcement is now necessary,” Curt Morgan said in an Oct. 13 statement.

Vistra spokeswoman Meranda Cohn said that Luminant will not be able to offer all the laid-off workers jobs at its other Texas power plants, but it will pay them severance benefits and partner with the Texas Workforce Commission to help them find other jobs.

Neil Carman, clean air director for the Sierra Club’s Lone Star Chapter, said he saw the writing on the wall for coal-fired power plants in 1990 while working as a plant inspector for the state’s environmental regulation agency, The Texas Commission on Environmental Quality, where he learned how expensive coal plants are to maintain because they have huge boilers that are quickly corroded by burning coal and have to be shut down each year for heavy-duty maintenance.

“None of us knew this was all going to change so quickly but we knew the cost for new coal plants, to build and operate them, was escalating…in 1990, Clean Air Act amendments…were passed by the Congress and signed by President George H.W. Bush on Nov. 15, 1990…the stage was set for all kinds of new pollution controls on refineries, chemical plants, cement kilns, incinerators, smelters and coal plants,” he said.

Carman said the economics don’t add up for coal power plant owners, so he understands why Luminant is pulling back. He predicted that there will  be no more of these plants built in the United States, even in the face of coal-industry support from the Environmental Protection Agency.

Both President Donald Trump and EPA chief Scott Pruitt have criticized former President Barack Obama for hurting the coal industry by trying to enact the Clean Power Plan.

The EPA finished drafting the plan in 2015, but court challenges have stopped it from taking effect. It was designed to reduce the nation’s greenhouse-gas emissions from 26 to 28 percent below 2005 levels by 2025, to help meet international pollution-control goals set out by the Paris climate agreement of 2015, which 168 countries have signed.

Trump announced in June that the United States would withdraw from the Paris deal, but experts say the earliest possible withdrawal date is in November 2020, when Trump will likely be distracted by a presidential re-election campaign.

At Pruitt’s direction, the EPA published a proposed rule last week in the federal register to undo the Clean Power Plan. The proposal will not be finalized until the end of a public-comment period, which could take months, during which Pruitt said he will seek input from the public on possible elements of a replacement plan.

“The war on coal is over,” Pruitt said the day before he signed the rollback proposal.

But Carman said he sees Trump’s and Pruitt’s toying with the Clean Power Plan as empty symbolism and stressed that market conditions are driving the coal industry to its grave.

“What they’re getting to operate these plants is not much. We heard a year ago, for example, the coal plants in Texas were being paid $30 per megawatt hour, but it costs them $50 a megawatt hour … So they were losing money just operating them because of all the cheap wind, solar and gas,” he said in a phone interview.

The costs for pollution-control equipment for coal power plants has ballooned over the years, Carman said, pointing to the Fayette Power Project, a plant co-owned by the city of Austin and the Lower Colorado River Authority, a nonprofit public utility.

He said Austin and the river authority got an estimate in 2001 that it would cost $50 million to install “scrubbers” at the plant to mitigate haze and acid-rain forming sulfur dioxide.

“By the time they finished it in 2010 it [would] cost nearly $450 million. Their costs skyrocketed from higher steel prices, construction, labor costs, everything,” he said.

Carman said Texas is an oil-and-gas state that is awash in natural gas being unleashed by hydraulic fracturing, and drillers are investing in hundreds of thousands of wells in the state while more natural gas-fueled power plants are being built to take advantage of the cheap fuel.

“They don’t care about the coal industry,” he said.

Vistra’s plans to close its three coal-fired power plants may be delayed if the Electric Reliability Council of Texas, or ERCOT, decides that they need to stay online to keep up with the state’s power demands. ERCOT manages nearly all of the Texas electrical grid.

“ERCOT will study whether these specific units are needed for transmission system reliability in their respective areas of the grid and will  make those determinations by December,” its spokeswoman Robbie Searcy said.

Back in Milam County, Johnson-Vasquez said she doesn’t expect ERCOT to order Luminant to keep the Sandow Power Plant running.

“Obviously with the wind and solar becoming the norm and being cheaper to process, the odds of it not being shut down are very slim I think,” she said. “There’s hope in that but I don’t think it’s going to be the reality based on everything that we have learned from Vistra Energy.”

She said Vistra officials met with her and other local leaders on Oct. 13 to break the bad news.

With the plant closure all but inevitable, Johnson-Vasquez said she will take her gun business on the road.

“My plan is to expand back into doing more gun shows because that takes me outside of Milam County. Of course my store will remain open during the week, and I do have some great customers here locally, but I know it’s going to hurt me just, as it will every business in Milam County,” she said.

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