Two Coal-Fired Power Plants Closing in Texas

"These two plants are economically challenged in the competitive ERCOT market. Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision," Luminant's announcement said.

Luminant, a subsidiary of Vistra Energy, announced Oct. 13 it will close two coal-fueled power plants in Central Texas, its two-unit Sandow Power Plant in Milam County and its two-unit Big Brown Power Plant in Freestone County. According to the company, about 2,300 MW of nameplate power will be taken offline in early 2018 as a result.

"These two plants are economically challenged in the competitive ERCOT market. Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision," its announcement said.

It quotes Curt Morgan, Vistra Energy's president and CEO: "This announcement is a difficult one to make. It is never easy to announce an action that has a significant impact on our people. Though the long-term economic viability of these plants has been in question for some time, our year-long analysis indicates this announcement is now necessary. These employees have kept both plants reliably powering Texas for decades, and we greatly appreciate their service."

As for the Sandow Site, the company said it and Alcoa this week entered into a contract termination agreement pursuant to which the parties agreed to an early settlement of a long-standing power and mining agreement, and in consideration for the early termination, Alcoa made a one-time payment to Luminant. "The settlement follows a decrease in wholesale power prices in ERCOT and the prior curtailment of Alcoa's smelter operation next to Sandow. The contract has helped shield Sandow from significant exposure to the downturn in the wholesale power market; however, the standalone economics of the Sandow complex no longer support continued investment in the site in this low wholesale power price environment." It also said the Three Oaks Mine, located primarily in Bastrop County and supports the plant, also is closing.

Luminant estimates about 450 employees will be impacted by the Sandow plant and Three Oaks mine closure; eligible and affected employees will be offered severance benefits and outplacement assistance. Luminant filed on Oct. 13 a 90-day notice of suspension of operations with ERCOT, which will trigger a 60-day reliability review. If ERCOT determines the Sandow units are not needed for reliability following this 60-day review, Luminant expects to cease plant operations on Jan. 11, 2018.

Luminant will try to sell the Big Brown Site. The Turlington Mine that supplies it was already scheduled to wind down operations by the end of 2017, and the company indicated reclamation work will continue there. Luminant estimates about 200 employees will be impacted by the Big Brown closure.

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