Last week, Conservation Law Foundation and its allies cheered the news that New England’s largest coal plant, Brayton Point Station in Somerset, Massachusetts, will shut down by 2017. Brayton Point has loomed over Somerset and neighboring environmental justice communities on the South Shore for nearly 50 years, belching pollution into the air and destroying wildlife in Mt. Hope Bay.
Brayton’s retirement means game over for coal in New England. If the largest coal plant in New England with the lowest cost to make coal-fired electricity can’t survive in the New England market, no coal plant can. New England’s remaining coal plants are all older than Brayton, produce electricity that is more expensive than Brayton’s, and will face the same fate in the near term.
A recent report by the staff of the New Hampshire Public Utilities Commission (issued prior to Brayton Point’s retirement announcement) uses Brayton Point as the benchmark against which the economic viability of other coal plants should be judged. The report notes that Brayton Point is “the most economic coal plant” in New England and that all other coal plants “are substantially behind Brayton Point” in terms of their cost to produce power. Put another way, the economic prospects for all of the remaining coal plants in New England are worse for their owners than are Brayton Point’s.
One by one, our region’s oldest and biggest polluters are succumbing to the market and the march of technology:
|Somerset Station, Somerset, MA||SHUT DOWN|
|AES Thames, Montville, CT||SHUT DOWN|
|Salem Harbor Station, Salem, MA||WILL SHUT DOWN in 2014|
|Brayton Point, Somerset, MA||WILL SHUT DOWN in 2017|
|Mt. Tom Station, Holyoke, MA||Expected to SHUT DOWN by 2016|
|Bridgeport Harbor State, Bridgeport, CT||Running at 4% capacity|
|Schiller Station, Portsmouth, NH||Running at 12% capacity|
|Merrimack Station, Bow, NH||Running at 35% capacity|
*2012 capacity data from EPA and Energy Information Administration
CLF empathizes with the challenges faced by workers, businesses and communities bearing adverse economic impacts from the now-clear demise of the region’s antiquated coal fleet. We firmly believe that no plant closing can be truly celebrated without a viable plan to ensure a just transition to a healthier future. For the past two years, a major element of our advocacy (along with our colleagues at the Toxics Action Center) has been to urge state and municipal leaders to begin planning for these retirements and their local impacts, both positive and negative. We have seen the writing on the wall for this polluting and increasingly obsolete method for producing electricity for at least five years now.
CLF and many other organizations have had a long history of holding Brayton Point’s feet to the fire in order to protect public health and the environment. And as has been pointed out by many, the evolution of the power market to cleaner and more efficient power plants and energy resources has had a big role. As a member of the New England Power Pool (NEPOOL) which helps make the rules for and oversee the region’s electricity market, CLF has had not only a bird’s eye view to these market factors, but a role in shaping them.
In February, 2013, CLF released a report exposing Brayton Point’s financial vulnerability. Entitled Dark Days Ahead, the report showed that a perfect storm of factors – including low natural gas prices– spelled imminent doom for the plant. As Paul McMorrow said in his thoughtful article covering the retirement announcement in Commonwealth Magazine:
[T]he Conservation Law Foundation  report on Brayton’s financials  reads like an obituary.
The CLF report, co-authored by Schlissel, the Belmont-based energy consultant, outlined a bleak financial future for Brayton. The plant was losing the fight with natural gas, and running at a fraction of its capacity. The plant’s earnings had dropped from $345 million in 2009, to around $24 million in 2012, at a time when the plant was wrestling with $1 billion in new costs—the plant’s new cooling towers and air pollution scrubbers. The size of those improvements, Schlissel argues, shows how quickly the ground shifted under Dominion: In 2005, Brayton Point was worth a billion-dollar upgrade, but not long after those improvements came online, Dominion sold Brayton “for piddling,” he says. Brayton and a pair of midwestern power plants netted Dominion $472 million, but industry observers believe that Brayton was a throw-in to the sale—the property that the buyer, Energy Capital Partners, had to take to get the others. The sale closed earlier this year.
In fact, CLF’s report, prepared by the Institute for Energy Economics and Financial Analysis, accurately predicted the future – a future which no plant owner, including the recent buyer of Brayton Point, could ignore. As CLF noted previously, Brayton Point was sold to Energy Capital Partners for its scrap value – in effect given away – immediately after a $1 billion capital improvement.
To its credit, Energy Capital Partners apparently read and agreed with CLF’s report. A recent post in Eco RI News discussed the new owners’ perspective on the future of Brayton Point when they purchased it:
James Ginnetti, spokesman for EquiPower, a subsidiary of Brayton’s new owners, Energy Capital Partners, said the company knew when it bought Brayton Point it would struggle to operate beyond May 2017, because of low natural gas prices and the high costs to maintain the facility and adhere to environmental regulations.
“We bought three power plants from Dominion and did not ascribe much value to Brayton Point for these reasons,” he said.
It bears repeating: A plant with a book value of over $1 billion due to recent investment is essentially worthless.
There was a time when extracting million year old carbon rocks from under the ground, shipping them over long distances, crushing them and then blowing them into large vessels with air to make fire was the state of the art in how to generate power in New England. In that era, the country’s population was roughly half of what it is today. Taking and despoiling large swaths of what is now prime waterfront property and disposing the detritus of that combustion into the air and water shared by everyone seemed like an acceptable practice. In New England, the retirement announcement from the region’s largest coal-fired power plant signifies the official end to that era. Technology and New England’s competitive electricity market have made the 50 year old Brayton Point power plant obsolete. Newer, cleaner, more efficient, and lower cost energy sources and the value of energy efficiency to reduce electricity demand are instituting a new era for New England, and following in our footsteps, the rest of the country.