Faced with installing expensive pollution controls at its coal-fired Portland station in Mount Bethel, PA, GenOn Energy, Inc. has decided to shutter the site in January 2015. New Jersey has long sought to clean up the dirty, polluting Portland plant.
The decision by the Houston-based company was one of eight power plants it has decided to close, beginning this June and extending into May 2015, including a small peaking unit in Glen Gardner. The company attributed the decision to required investments in pollution controls that would make the returns "insufficient."
In adopting tougher environmental rules, the Portland plant faced up to $300 million in expenditures to reduce pollution from the plant to keep it operating. Another factor in the company’s decision, announced during an earnings call, is the low prices of natural gas, which have supplanted coal as a prime source of electricity generation, according to analysts.
"It’s a combination of the two," said Paul Patterson, an energy analyst for Glenrock Associates. "It’s partly due to the pollution controls, but also because of the lower price of natural gas that is putting a lot of pressure on coal-fired power plants."
The Portland plant, a 401-megawatt facility located across the Delaware River from Warren County, has long been the target of federal and state environmental authorities. According to the state Department of Environmental Protection, the plant in 2009 emitted twice the amount of sulfur dioxide than all other power plants in New Jersey. Sulfur dioxide is a pollutant that contributes to acid rain.
DEP Commissioner Bob Martin called the decision to close down the coal-fired units at Portland a win for cleaner air, but vowed to press efforts to have the facility clean up its emissions by 60 percent by the beginning of 2013, and by at least 81 percent by 2015.
"These steps are essential for the health and welfare of our citizens," Martin said, who acknowledged there are many unknowns about GenOn’s plans. For instance, the company has not yet withdrawn its legal challenge to a successful effort by the state to a petition that mandated the emission reductions.
Nonetheless, environmentalists welcomed the announcement that the plant would close.
"This an outdated and inefficient plant compared to what has come online recently," said Jeff Tittel, director of the New Jersey Sierra Club, which had joined a state and federal lawsuit to close down the plant. "Without the subsidy of being allowed to pollute at will, they cannot compete in the market," he said.
Tittel said it would be better if the plant would close before January 2015, but he noted even with the lawsuit, it might have taken that long to achieve a final verdict from the courts.
The two New Jersey plants would be the last to be deactivated by GenOn, according to a press release issued by the company. The Glen Gardner plant, a peaking facility running on either natural gas or fuel oil, is scheduled to close in May 2015, the last of the eight facilities targeted by the company.
Calls to GenOn to explain the rationale behind the phased closings were not returned. Overall, the company plans to shut down 3,140 megawatts of generating capacity in PJM, the regional operator of the nation’s largest power grid.
The retirement of aging coal plants is not an unexpected occurrence, especially since the federal Environmental Protection Agency adopted tough new rules that would require most to install expensive pollution controls to reduce emissions of mercury and other pollutants.
But with the drop in natural gas prices, even those that have installed sophisticated pollution controls run less frequently because PJM dispatches plants based on lowest cost. That has become an issue for PSEG Power, which has seen its earnings decline because its two coal-fired plants run less often that the units powered by natural gas.