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Big Utility to Close 11 Plants Using Coal

A large Southern utility said Tuesday that it would close 30 percent of its North Carolina coal-fired power plants by 2017, a step that represents a bet that natural gas prices will stay acceptably low and that stricter rules are coming on sulfur dioxide emissions, which cause acid rain.

The utility, Progress Energy , based in Raleigh, said it would close 11 coal-fired power plants built between the 1950s and 1970s.

Water vapor rising from a Progress Energy coal plant.
Source: progress-energy.com
Water vapor rising from a Progress Energy coal plant.

“Some of these plants are quite old,” said Bill Johnson, the chief executive of the company. But, he added, “They have a lot of useful life left in them, absent the need to put emissions control units on them.”

Mr. Johnson also said the company was taking a risk by reducing its output of carbon dioxide, which is not yet regulated, in the near term. He and others expect that Congress will eventually impose a limit on carbon dioxide emissions, possibly in the form of percentage reductions based on a baseline year. By closing the plants now, Progress is effectively cutting its baseline, meaning it may have to reduce emissions even further in the future.

“We need to do the right thing, regardless of that, and this is the right thing,” he said in a telephone interview. If there is a control system added later, he said, “we’d be making a strong argument, ‘Don’t penalize us for doing the right thing.’ ”

While the short-term substitute is natural gas, the long-term plan is a nuclear backbone for the company’s generating system, he said.

The plants being closed, at four sites, have a combined capacity of nearly 1,500 megawatts. Progress has spent more than $2 billion to put state-of-the-art controls on 2,500 megawatts of coal generation, the company said. And it has already announced plans for one new gas-fired plant and will soon announce additional plans, the company said. Progress is also planning to build two nuclear reactors in North Carolina and two more in Florida, but none will be in use by 2017.

Gov. Bev Perdue said in a statement that the announcement by Progress was important for the state’s air quality. “The transition toward cleaner sources of energy is good for the environment and the economy,” she said.

The Carbon Challenge - A CNBC Special Report - See Complete Coverage
The Carbon Challenge - A CNBC Special Report - See Complete Coverage

Progress said it might repower some coal-burning plants with wood waste. It does not anticipate large-scale wind or solar power in the near future, Mr. Johnson said. There is good wind offshore, but the area routinely experiences hurricanes that are stronger than existing wind machines can handle, he said.

Duke, another utility that operates in North Carolina, is closing some coal plants but is building a new one.

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