More Coal Cuts—AEP, Mississippi Power Detail Closures

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American Electric Power (AEP), which in 2019 reached an agreement to close Unit 1 of the two-unit, 2.6-GW coal-fired Rockport power plant in Indiana, has now announced a plan to close Unit 2 of the facility.

Both units at Rockport are now expected to be shuttered by year-end 2028. AEP, the parent of Indiana Michigan Power, which operates the plant, on April 22 announced it would purchase Unit 2 of the plant from Wilmington Trust Co., a financial services firm. The deal was made to ensure the retirement of both units.

Thursday's announcement came as AEP announced its first-quarter 2021 earnings, which were $575 million, compared to $495 million for the same period in 2020. AEP, like many power generating companies, is retiring older power plants and replacing that generation with renewable energy resources. AEP has said its goal is to reduce carbon dioxide emissions by 80% from its 2000 baseline by 2030.

AEP has said both units of the coal-fired Rockport plant in Indiana will close by year-end 2028. Courtesy: American Electric Power

The Biden administration has said it wants to decarbonize the nation's power sector by 2035 as part of its climate change initiatives.

Our solid earnings for the quarter reflect the continued investments we are making to enhance service for our customers and modernize the grid as we accelerate our transition to a clean energy future," said Nicholas K. Akins, AEP chairman, president and CEO. We are making significant progress in diversifying our generation fleet with investments in renewable energy resources. Last week, we reached a milestone with the commercial operation of Sundance, the first of three North Central wind projects that will provide clean energy to our customers in Arkansas, Louisiana and Oklahoma while also saving them an estimated $3 billion in electricity costs over the next 30 years."

AEP outlined a plan to add more than 16 GW of wind and solar generation to its portfolio by the end of the decade.

We have reviewed the resource needs for each of our regulated operating companies and propose to add nearly 16,600 MW of new, clean wind and solar generation to our fleet by 2030, growing our renewable generating portfolio to more than 50% of our total capacity," Akins said. In addition, Indiana Michigan Power and AEP Generating Company have reached an agreement to acquire the 1,310-megawatt Rockport Plant Unit 2 from the current owners when the lease expires at the end of 2022. This acquisition will provide a short-term capacity bridge for customers as we transition to more renewable generation and will ensure both Rockport Plant units are retired by the end of 2028. These investments in our generation portfolio support our goals of making our generation fleet cleaner, more economical and achieving net zero carbon dioxide emissions by 2050."

Mississippi Power Exiting Coal

AEP's announcement came just days after Mississippi Power, a subsidiary of Southern Co., said it would close the last of its coal-fired power plants, along with three natural gas-fired units. The utility on April 16 announced the closures in its first-ever comprehensive long-term energy plan, which came two months after the Mississippi Public Service Commission (PSC) in February told the utility to cut 950 MW from its system by 2027. The PSC ordered Mississippi Power to file an update to its long-range plan in April that would include accelerating the retirement of some combination of [gas-fired] Plant Watson Units 4 and 5, [gas-fired] Plant Greene County Units I and 2, and/or [coal-fired] Plant Daniel Units 1 and 2." The commission cited the utility's own study that showed it had significant excess power reserves. The utility at that time said it likely would look to cut fossil fuel-fired generation from its portfolio.

Mississippi Power last week said it will close 975 MW of generation, including the one unit it owns at Plant Daniel-its only remaining coal-fired unit-which it said would be shuttered by year-end 2027. It also will close the 268-MW gas steam generator Unit 4 at Plant Watson in December 2023. Mississippi Power also will shutter its 40% share, which includes two units, of the Greene County gas-fired plant by December 2026.

Mississippi Power in late 2019 received approval for $100 million to upgrade Plant Daniel, which the utility had expected to run to 2046, despite Southern Co.'s net-zero carbon goal by 2050. Plant Daniel has two 500-MW coal-fired units, along with two 500-MW combined cycle gas-fired units.

Part of Plant Daniel is owned by Gulf Power Co., a one-time Southern subsidiary that was purchased by NextEra Energy in 2019. NextEra is in the midst of adding more clean energy to its fleet, including plants operated by Gulf Power. That transition includes closing Gulf Power's 50% share of Plant Daniel by 2024-meaning coal-fired generation at the facility will end when Mississippi Power's closes its share.

Mississippi Power in recent years had converted some of its coal plants to run on natural gas, including both Watson and Greene County. The utility in filing its energy plan said it projects little, if any, customer load growth due to energy efficiency gains, operational changes within the commercial class and wholesale contract load projections. MPC is not projecting a capacity need until 2031 or later under the various planning scenarios considered," the company said.

Mississippi Power produces 92% of its electricity from natural gas, up from 49% in the past decade. The utility's coal-fired generation has dropped to 6%, from 51%, over the past 10 years.

Regulated electric power companies in Mississippi previously were not required to file a formal integrated resource plan (IRP), in which utilities forecast their generation portfolios across the next several years. The PSC in 2019 called for a formal IRP process, including an all-source planning process, which is prevalent in states outside the U.S. Southeast. The all-source process expands the type of fuel resources that can be considered if a utility needs to add generation capacity, including renewables. The all-source process has been supported by clean energy advocates, who say it enables wind, solar, and energy storage to compete more effectively with baseload power sources such as coal and natural gas.

Mississippi Power's filing said the utility looked at solar power and battery storage for the first time, and also cited the adoption of electric vehicles, energy efficiency technologies, and distributed energy resources such as rooftop solar, in modeling its future generation.

-Darrell Proctor is associate editor for POWER (@POWERmagazine).

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