U.S. EPA finally issued its long awaited air pollution regulation aimed at reducing mercury emissions from coal-fired power plants- Mercury and Air Toxics Standards (MATS).  MATS sets specific numeric emission standards for mercury and other air toxics from coal-fire power plants  25 megawatts in size or larger.

MATS will apply to some 1,400 generating units across the country.  The rules carry with them a $9.6 billion dollar price tag.  Power produces have until 2015 to 2016 to comply with the new regulations.

The new regulation, along with a series of earlier federal regulations, have made coal power generation more expensive. Meanwhile, the rich deposits of natural gas in the Marcellus and Utica Shale have kept natural gas prices down. 

Ohio could be at the center of a major shift in power generation.   Right now Ohio’s baseload power generation tilts heavily in favor of coal with 86% of its generation from coal and only 2% from natural gas.  However, the scales may be starting to go  in favor of natural gas.  MIT’s recent study on natural gas showed its role will increase significantly the coming years in the energy sector. 

On June 8, 2011, AEP released its compliance plan which calls for retirement of coal plants and new natural gas capacity.  According to SourceWatch:

 AEP’s compliance plan would retire nearly 6,000 megawatts (MW) of coal-fueled power generation; upgrade or install new advanced emissions reduction equipment on another 10,100 MW; refuel 1,070 MW of coal generation as 932 MW of natural gas capacity; and build 1,220 MW of natural gas-fueled generation. The cost of AEP’s compliance plan could range from $6 billion to $8 billion in capital investment through the end of the decade

In 2011, many power producers announced they were closing Ohio coal-fire generating facilities.  These include:

  • AEP’s Picway
  • AEP’s Conesville
  • AEP’s Muskingham River
  • Duke Beckjord
  • DP&L Hutchings

According to an Associated Press survey of 55 power producers, more than 32 mostly coal-fired power plants in a dozen states would close. The survey indicated no threat to the reliability of the nation’s power system.

Pennsylvania is about decade ahead of Ohio in its shift toward natural gas due to the fact the Marcellus shale formation is proven and the Utica shale is not.  Pennsylvania offers a glimpse into Ohio’s future.

Chart shows Pennsylvania’s ten fold increase in natural gas power generation.  In a decade, natural gas has gone from 2% of Pennsylvania’s power generation to 17%. 

Meanwhile, coal power generation in Pennsylvania has seen a corresponding drop from 56% to 47% of overall generation in the State.   (Chart- Investment U "Pennsylvania leading the shift to natural gas)