Analysis: Northwest US pressed to drop coal

OREANDA-NEWS. June 09, 2015. The few remaining coal-fired power plants servicing the northwest US run at high capacity factors and have direct access to Powder River basin supply but regulatory pressure will force their retirements in 2020s.

TransAlta's 1,340MW Centralia coal plant in southwest Washington state will lose half its capacity in 2020 and will halt operations in 2025. Portland General Electric, the majority owner of the 585MW Boardman plant, plans to retire the north-central Oregon facility in 2020.

The two plants in recent years ran at average annualized capacity factors of 60-68pc, according to the ColumbiaGrid northwest planning agency. Centralia and Boardman are the only coal plants left in Pacific coastal states.

The plants are dispatched even more often, at more than 80pc capacity factors, between August and February when hydropower output is stable. Spring runoff in March-July lifts hydropower generation.

Northwest wind capacity and imports of solar generation from California are suggested as potential replacement for retiring coal but only combined cycle plants burning natural gas offer the same level of capacity factor capability, staff said at ColumbiaGrid's meeting yesterday.

Legislators in Washington and Oregon also are pushing state utilities to divest ownership stakes in coal plants located elsewhere in the west. The 2,090MW Colstrip in Montana is a potential object of coal divestment proponents. ColumbiaGrid and another power planning agency, Northern Tier Transmission Group, are looking to analyze the effects of the potential retirement of the smallest units 1 and 2, with 614MW of capacity. Plant operator Talen Energy has no plans to retire the facility.

Colstrip is dispatched more often than its Oregon and Washington counterparts, with average annualized capacity factors of 75pc.

Talen disclosed this week that it hedged its Colstrip power sales at \\$40-\\$42/MWh for 2015, achieving spark spreads of \\$14-15/MWh. It hedged coal supply at delivered prices of \\$27-\\$31/ton for 2015 and \\$27-\\$33/ton.

Centralia in the first quarter took 1mn short tons from the adjacent Centralia mine, the Spring Creek and Absaloka mines in Montana and the Rawhide mine in Wyoming, Energy Information Administration data show. Boardman received 354,885st from the Black Thunder, Belle Ayr and North Antelope Rochelle mines in Wyoming. Colstrip took 2.2mn st from the Rosebud plant adjacent to the plant.