Reuters: Regulatory News: UPDATE 1-California approves SCE exit from coal-fired power plants

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UPDATE 1-California approves SCE exit from coal-fired power plants Mar 23rd 2012, 17:46 Fri Mar 23, 2012 1:46pm EDT * APS to pay $294 million for SCE stake in plant * APS to retire old units after buying SCE stake * Old coal units to retire due environmental rules By Scott DiSavino March 23 (Reuters) - California utility regulators approved Southern California Edison's (SCE) previously announced $294 million sale of its interest in the Four Corners coal-fired power plant in New Mexico, ending the company's ownership in coal-fired generation. California has some of the toughest greenhouse gas and renewable energy requirements in the United States. To meet those rules, the state's utilities are buying more power from wind and solar projects and shedding older fossil-fired units. The California Public Utilities Commission (CPUC) required SCE, a unit of California energy company Edison International , to sell its interest in coal-fired power plants by 2016. "With today's decision, we close a chapter in California for our regulated utilities and their ownership interest in coal-fired generation facilities," CPUC President Michael Peevey said in a statement. SCE owns a 48 percent share in the 770-megawatt Units 4 and 5 at Four Corners, which is operated by Arizona Public Service (APS). APS is a unit of Arizona energy company Pinnacle West Capital Corp. SCE agreed to sell its share in Four Corners to APS in November 2010. A spokesman for APS, Damon Gross, said before completing the purchase, APS still had to get approval from Arizona regulators and an extension of the plant's coal contract. The company's goal, he said, was to have the deal completed by the end of the year. There are five units at Four Corners. Units 1, 2 and 3 are wholly owned by APS. Units 4 and 5 are 48 percent owned by SCE, 15 percent by APS, 13 percent by PNM Resources' Public Service Co of New Mexico, 10 percent by Salt River Project, 7 percent by El Paso Electric and 7 percent by UniSource Energy's Tucson Electric. SHUT OLD COAL PLANTS APS plans to shut Units 1, 2 and 3 if it acquires SCE's stake in Units 4 and 5. APS would shut Units 1, 2 and 3 because they are older and smaller than Units 4 and 5 and are therefore not economically practical to upgrade to meet the new, more stringent federal emissions requirements proposed by the Environmental Protection Agency (EPA) over the past few years. Energy companies have announced plans to shut more than 30,000 MW of coal-fired generation in the United States, primarily because of the new EPA regulations, weak power market conditions and natural gas prices near a 10-year low that are making efficient gas plants cheaper than older coal units. See FACTBOX on coal fired retirements. Units 1 and 2 are each 170 MW and entered service in 1963. Unit 3 is 220 MW and entered service in 1964. Units 4 and 5 are 770 MW each and entered service in 1969 and 1970. Separately, APS operates the four-unit, 1,027-MW Cholla coal power plant in Arizona. The company is waiting for federal regulators to finalize rules related to regional haze to determine if it makes economic sense to invest in equipment to control mercury emissions in at least one of the Cholla units. The other three units have baghouses to control the mercury emissions and other particulate matter. Link this Share this Digg this Email Reprints

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