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The cost of coal plant closures

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World Coal,

A new report from the Institute of Energy Research (IEA) has called for an end to the closure of coal-fired power plants in the US, arguing that forcing such plants to shut will harm supply reliability, affordability and security.

Coal shutdowns impact those who can least afford it

The report – “Protect the American people: moratorium on coal plant closures essential” – was authored by Dr Roger Bezdek and Dr Frank Clemente and provides a response to the newly proposed greenhouse gas regulations proposed by the US Environmental Protection Agency. It found that policies that adversely impact the US coal-fired power plant fleet will significantly increase wholesale electricity rates – possibly by as much as 80%. This will hit those who can least afford it – low income families, minorities, children and the elderly – most.

Taking the 2013/14 winter as an example, the report noted that coal met 92% of the year-on-year incremental electricity demand for the first two months of 2014 and that during this time, without coal plants, parts of New England, the Midwest and other regions would have experienced brownouts and bloackouts.

Figure 1. What showed up for work during the polar vortex? Share of incremental year-on-year generation by fuel: Janauary – February 2014. Source: Protect the American people: moratorium on coal plant closures essential.

The past winter demonstrated in real time the value of the existing coal fleet,” argues the report. “Americans were harmed as the relentless cold indicated that prudent utility practices require large baseload coal plants to stabilize [sic] the grid, keep society functioning, and maintain electricity availability.”

Without coal there is no cushion for gas price spikes

Gas prices also rocketed during that time with some locations in the Midwest experiences gas prices as high as US$35/million Btu and the Chicago Citygate price exceeding US$40/million Btu. In the past, coal has helped to cushion the impact of such spikes: in its absence, the report argues that electricity bills may become unaffordable for many.

Figure 2. Chicago Citygate natural gas prices: June 2013 – 2014 (US$ per million Btu). Source: Protect the American people: moratorium on coal plant closures essential.

Taking New England as an example of the implications of removing coal-fired power plants, the report notes that average electricity rates are already more than 40% higher than the national average with New York recording the second-highest rates in the country after Hawaii.

“With the projected closure of 60 GW of coal plant capacity, virtually the entire US is rapidly reaching the brink of significantly higher prices for electricity and being unable to meet either the summer or winter peak demand for power,” concludes the report.

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