Amid a glut of cheap natural gas and stiffening environmental rules, Santee Cooper will shutter its two oldest coal- and oil-fired power plants, following the lead of other U.S. electricity providers.
It will mark the first time the state-owned utility has retired a major power plant since it began generating electricity 70 years ago.
The public utility announced Friday that the plants to be closed are the Jefferies Generating Station in Moncks Corner, built in 1954, and the Grainger Generating Station near Conway, which began operations in 1966.
“It is not a decision we make lightly,” said Santee Cooper Chairman O.L. Thompson. “However, it is the most cost-effective move we can make.”
The utility expects to relocate affected employees to other parts of the agency and doesn’t expect any layoffs. It has no firm timetable to close the plants.
Santee Cooper CEO Lonnie Carter said the shutdowns will be a multi-year process that will require permits, engineering work and public input.
The utility picked the two plants, and their six generating units, based on their age and the investment that would be required to bring them in compliance with new federal air standards that are in the pipeline, Carter said.
“It’s just not economical to upgrade them,” he said.
Meeting demand from customers is not an immediate concern for the Moncks Corner-based utility, he added.
“The short answer is we will have enough capacity, even without these units, to meet our requirements,” Carter said.
He then noted that Santee Cooper is an investor with South Carolina Electric & Gas Co. in a $10 billion expansion of the V.C. Summer Nuclear Generating Station north of Columbia. The new reactors are expected to start delivering power in 2017 and 2018.
“This, of course, does make us very dependent on bringing those units on line,” Carter said. “We’re sort of all in on those.”
Santee Cooper joins other S.C. utilities in mothballing or closing older coal-fired power plants.
Earlier this year, SCE&G owner Scana Corp. said it would retire six coal-fired units in three of its facilities by 2018, including its Canadys plant on the Edisto River. Two weeks ago, Progress Energy, a subsidiary of Duke Energy, said it would shut down its coal plant in Hartsville.
Blan Holman, an attorney with the Southern Environmental Law Center, said environmental standards aren’t the cause of the shutdowns.
“The blame rests with old coal plants that lack controls to save lives and save the nation far more in health care costs than the equipment costs to install,” he said.
Santee Cooper’s Jefferies and Grainger stations were much smaller and less advanced than the agency’s other plants. Together, they were capable of generating 568 megawatts of electricity. In comparison, Santee Cooper’s largest power plant at Cross produces 2,390 megawatts and has advanced scrubbers and other pollution-control equipment.
The shift away from coal-fired energy production also comes amid a flood of new natural gas production in the United States and Canada. The increasing supply has driven down prices for that fuel, making it less expensive than coal.
Santee Cooper has long been dependent on coal to generate between 70 and 80 percent of its electricity, but the announcement marks a significant shift away from that fuel source. In addition to its investment in nuclear energy, the agency has plans to purchase power generated from natural gas as part of a deal to lower electricity costs for aluminum maker Alcoa, one of its biggest customers.
At the same time, one of Santee Cooper’s most important customers, the state’s electric cooperatives, will soon get a significant percentage of its power from Duke Energy, a move that left Santee Cooper with extra generating capacity.
Kenneth Sercy, a utilities regulation specialist with the Coastal Conservation League, said the decision by the board “isn’t a surprise.” The agency has a lot of “wiggle room when it comes to capacity.”
John McDermott contributed to this report.