Luminant sues EPA, says it will shut two coal units, cut 500 jobs

The largest power plant operator in Texas says it is closing two large coal-fired units in order to meet pending environmental rules and has filed suit against the Environmental Protection Agency in an effort to block the rules.

Dallas-based Luminant said today it will close Units 1 and 2 at the Monticello Power Plant in Northeast Texas, taking about 1,200 megawatts of capacity offline, in order to comply with the  Cross-State Air Pollution rules that go into effect on Jan. 1.

Unit 3 at Monticello will switch over to using only coal from Wyoming’s Powder River Basin, meaning operations at two nearby lignite mines will stop.

At the Big Brown power plant in Freestone County, Units 1 and 2 will switch over to Powder River Basin coal and the nearby lignite mines will close.

The moves will lead to about 500 job cuts, the company said.

“While Luminant is making preparations to meet the rule’s compliance deadline, this morning it also filed a legal challenge in an effort to protect facilities and employees, and to minimize the harm this rule will cause to electric reliability in Texas,” the company said in a statement.

The company is asking an appeals court for a stay implementing the Cross-State rule, saying it is illegal because the EPA didn’t include Texas in the draft rules released in 2010. The final rules released in June 2011 included a heavy emissions reduction burden for Texas.

Texas officials quickly seized on the company’s actions as evidence of the need for regulatory reform in a slumping economy. Just a week before, ERCOT, the state’s main power grid operator, warned that the rules could threaten electric reliability with the forced retirement of older coal-fired units.

“As expected, the only results of this rule will be putting Texans out of work and creating hardships for them and their families, while putting the reliability of Texas’ grid in jeopardy,” Gov. Rick Perry said in a statement.

The Texas Commission on Environmental Quality, which is charged with overseeing the state’s air quality, said the Luminant announcement is “a sad confirmation of the TCEQ’s previous statements” against the regulations.

“These rules, imposed on Texas without adequate notice and without adequate scientific justification, will kill jobs, put the brakes on economic growth, increase energy costs and impair our energy security—all with little or no positive environmental effects,” the TCEQ said in a statement.

Environmental groups hailed Luminant’s decision, however.

“The announcement by Luminant today is a victory for all Texans who care about clean air,” said Eva Hernandez with Sierra Club’s Beyond Coal campaign in Texas. ”Coal-fired electricity is the primary source of toxic mercury pollution and is a leading trigger of asthma attacks. Children, the elderly, and anyone with respiratory illness are especially vulnerable to air pollution emitted from coal-fired power plants.”

Gina McCarthy, the EPA’s air quality chief, said the agency had worked with Luminant for weeks on a “no-shut down, no-layoff solution,” including greater use of pollution controls already installed.

“It is unfortunate that company leadership rushed to a decision that needlessly puts their workers’ jobs at risk,” she said. “It’s not EPA’s role to tell private companies what business decisions to make, but we firmly believe that there are better alternatives for Luminant.”

Of the major power plant operators in Texas, Luminant has been the most vocal about the rules.

Its parent company — Energy Future Holdings, formerly TXU — has been financially strained ever since a $45 billion private equity leveraged buy-out in 2007. The company has renegotiated extensions on its huge debt burden, but a Sierra Club study says the buyout — combined with lower natural gas prices — has slashed the value of the coal-fired plants and makes further investments in pollution controls highly unlikely.

Amid news of layoffs and closings, Luminant said it will spend about $280 million to upgrade pollution controls at the remaining Monticello unit and its power plants in Rusk and Milam counties by then end of the year. The investment should reach $1.5 billion before the end of the decade, the company said.

“Unfortunately, the rule’s 2012 deadline will not allow for the permitting, construction and installation of new equipment in time to avoid the announced closures,” the company said.

But other operators of coal-fired power plant say the rules are manageable.

Princeton, N.J.-based NRG Energy, the second-largest power generator in Texas, said it will comply by increasing the efficiency of its scrubbers by 10 to 15 percent and using more low sulfur coal.

NRG’s Parish power plant in Fort Bend County uses a low-sulfur coal from Wyoming’s Powder River Basin, while its Limestone plant uses a lignite/Powder River mix. The plants also have installed a full range of new pollution controls.

The Lower Colorado River Authority also said it is in good shape to meet the requirements at its 1,600-megawatt coal fired Fayette Power Project, 90 miles west of Houston. This year, LCRA installed new scrubbers in its two oldest units that remove about 95 percent of sulfur dioxide emissions.

Luminant is asking the federal appeals court for a stay implementing the regulation, claiming it is illegal because the EPA did not include Texas among those states regulated for sulfur dioxide, which forms the tiny particles known as soot, when proposing the rules last year. The initial plan only required Texas to cut nitrogen oxide emissions during the smog season.

The EPA has said Texas was added to the sulfur dioxide list because data shows that the state’s coal plants contribute to soot problems as far away as Illinois.

Ilan Levin, a Texas-based attorney for the Environmental Integrity Project, said Luminant is trying to blame the EPA for its own unwillingness or inability to invest in new pollution controls. The company has lowered emissions of sulfur dioxide by 16 percent over the last decade, while the industry as a whole has cut them in half, he said.

“It’s hard to take this company seriously when other large electric utilities have had no trouble slashing their pollution,” Levin said.

ERCOT, the state’s main power grid operator, said last month the new rule could threaten the reliability of the state’s power grid by forcing operators to take older coal-fired units offline.

Texas’ power grid came close to rolling blackouts twice this summer and had several days of tight reserves as a record-breaking heat wave and drought combined with a large number of unplanned plant outages.

42 Comments

  1. Jackalope
    #1
  2. chad

    Rick Perry is making Texas look stupid!

    #2
  3. Dweezil

    Crocodile tears, their “investment” will be paid for by the rate payers. They are going kicking and screaming into the 21st Century. The entire industry pays the fear and jobs game to scare prople into pressuring their representatives into changing the law. The law suits will ultimately be paid for by the rate payers. Why they don’t convert to natural gas is beyond me. It’s much cleaner that coal, especially lignite, and is in abundance in this state. THe power companies have gotten all they wanted and more from deregulation, now they want to keep spewing their poisen into the air we breathe.

    #3
  4. Doug

    The real crime here is that the federal regulators allowed the private equity guys to buy TXU in that leveraged buyout a few years ago. They saddled the company with $45B of debt, which begins to mature in a couple years, and took $20B a payday. Luminant/EFH/TCEH have been struggling ever since (cheap natural gas hasn’t help their cause either). It it a shame that 500 texans will lose their jobs, but I blame the private equity/investment bankers for making Luminant/EFH/TCEH uncompetitive from the get-go.

    #4
  5. Godiva55

    The Feds are crippling this country.

    Obama and his czars are ruining the American way.

    THIS IS A CRIME, that this should happen now. 500 jobs gone????

    God help us.

    #5
  6. Commandrea

    My children and their lungs thank thee. The 500 that will be out of jobs can crawl to Rick Perry and get a nice little government job- just don’t go into the teaching profession!

    #6
  7. Let's Get Real

    “Energy Future Holdings, has been financially strained ever since a $45 billion private equity levered buy-out in 2007.”

    So you don’t have money to invest in improving operations because someone recieved a big payout from the leveraged buyout.

    Blame politicians if you want, but nobody told them to leverage the asset to the hilt.

    Doug, I’m with you.

    #7
  8. 42

    Way to go NRG Energy!

    #8
  9. Argh !

    These companies don;t have the right to poison us with pollution and destroy the environment.

    #9
  10. Argh !

    God is helping us, he wants us to clean up his Garden by shutting down eco
    terrorist. Too bad the EPA doesn’t have larger teeth.

    #10
  11. pinnywoodsrooter

    Luminant should spend more time and money exercising corporate responsibility (make that individual responsibility since the SCOTUS says corporations are “people”) instead of trying to blame the EPA. This is all about corporate greed and state regulatory incompetence.

    Get ready for another series of “pass thru” rate increases to pay the legal bills for this frivolous lawsuit. You can thank Rick Perry & Co. for this “deregulated” fiasco.

    #11
  12. M1000

    The federal government promised hope and change, and indicated part of this would be new jobs. I say they have kept their promise! They created a few dozen new jobs in the EPA and a few dozen jobs in the new offshore drilling oversight agency; nevermind all the thousands of jobs they are costing in plant workers, miners, transport, rig workers and the associated suppliers of products for those areas. Just you focus on the new jobs!

    #12
  13. JW

    I am with you Dweezil all the way, crocodile tears and I was going to say what about natural gas but you beat me to it.

    #13
  14. Jennifer

    The heavy hand of Statism is at work here!

    This is making Obama look stupid and petty.

    #14
  15. mark

    In 40 years the EPA has grown larger than the people it was created to protect they even fight the federal government. For an organization that was just supposed to regulate improper pesticide use it has grown into a monster that has killed tens of thousands of jobs. Now they want everyone in the dark. It’s time to rein in the EPA. At one point they even proposed to ban BBQ cook offs but decided that would be too much. If anyone has noticed the most economically viable countries are burning coal as fast as they can get it. The ones going broke aren’t anymore including most of Europe and the US. Rick Perry is right on that point.

    #15
  16. Bobo Jones

    500 jobs are being cut at the whim of government. This is political decision, and not environmental. And the socialists run the federal government now.

    #16
  17. The $800 million spent annually on this rule in 2014, along with the roughly $1.6 billion per year in capital investments already under way as a result of CAIR, are improving air quality for over 240 million Americans and will result in $120 to $280 billion in annual benefits, including the value of avoiding 13,000 to 34,000 premature deaths each year.

    500 jobs vs. 13,000 to 34,000 LIVES saved per year? Are we really going to debate that tradeoff?

    #17
  18. 76acres

    The regulations will reduce jobs in Texas, both at the companies and, during peak demand,at their customers’ businesses. That would make Perry look worse. Surely those nice folks from Chicago would not do that intentionally. Just a coincidence. Nothing to see here. Move along.

    #18
  19. RPME

    The interesting aspect of switching the lignite units over to Powder River coal is that I guess all the diesel exhaust of the unit trains running loaded southeast and empty back northwest doesn’t count as Cross Border Pollution……

    #19
  20. Tom

    Luminant can say whatever they want. These plants were schedule to be shut down a long time ago. It’s not the EPA that is doing it, it is the price of natural gas. It is much less expensive for electric generators to use natural gas than it is coal. You ask me how I know; my next door neighbor will be loosing his job soon – he’s been sharing this with me since the “rumors” started to become real. That was almost a year ago.

    #20
  21. rts

    The problem isn’t the EPA or coal. NRG has no problem meeting the required pollution levels “The compliance costs are not expected to be material and there are no plans to close units or join in the Luminant lawsuit.” The problem is speculators and a leveraged buy-out by Luminant. Little or no money down, and high interest rate loans, hoping on higher prices to bail them out. Put the problem where it belongs rip-off artist hoping to get rich with other peoples money and knowing little about the business they are getting into, not coal, not EPA.

    #21
  22. Hey dweezil you idiot natural gas puts out a much more harmful gas than lignite, when you dont have any AC in this 107 degree temp. who will have crocodile tears then? Educate yourself before making comments next time.

    #22
  23. Joe Dokes

    . . some may eventually want to trade back their clean air for some cold air . . .

    #23
  24. Mac the knife

    Rick Perry should order Luminant to stop the shutdown and tell obozo that When he is president the EPA will be defunded.

    #24
  25. Charles

    “Argh ! wrote,
    September 12, 2011, 1:01 PM
    God is helping us, he wants us to clean up his Garden by shutting down eco
    terrorist. Too bad the EPA doesn’t have larger teeth.”

    REALLY! Are you nuts? I say we tell the EPA to kiss our butts and continue to produce energy. Just because the EPA says jump doesn’t mean we should. If this hurts the state then we should not follow it. Period.

    #25
  26. I can hear it already. Those who are saying “Right On EPA” will be singing a different song next summer when their houses heat up to 98 degrees because there is insufficient electricity to run their AC’s. Then, they will be writing their congressmen and demanding that something be done…and done now!

    #26
  27. starchamber

    You people that want all this electricity should be ashamed of yourself. Uncle Barack wants to shutdown the U.S. so socialism can replace democracy. He knows what’s best for all of you, yet you complain.
    The Chinese will barter with a socialist U.S. and everyone will be rich like the Cubans.

    #27
  28. bayshorebabydoll

    Hey Keith, before you go around calling other people idiots and telling them to educate themselves, why don’t you tell us what “much more harmful gas than lignite” that natural gas puts out when you burn it? Burning lignite as a fuel is fine, but natural gas does burn cleaner, and it just makes you look like the stupid one when you call other people idiots and then proceed to post incorrect drivel.

    #28
  29. Supertech

    Coal plants closing! Make way for more wind!
    Perry running for Prez is the best way for his politics to be revealed.
    They took Gas-fired plants off-line in the 80s when that got too high. Reap what you sow.

    #29
  30. David Gower

    We will need to filibuster some EPA hearings next summer on a 107 degree day without electricity and a/c. By that time we will be burning subdivisions instead of coal to make steam for electricity.

    #30
  31. A guy

    My daughter will be poorer. Her lungs are just fine because pollution in Houston is lower than at any time since the city’s founding. The shutting down of these power plants will have exactly 0 benefit for public health. The EPA’s own measurements confirm this, though they lack the wit to understand the concept of a null result.

    However, these shutdowns will cause rolling blackouts next summer.
    When they do, people will die.
    Their blood will be on hands of Lisa Jackson and Barrack Obama.
    May God have mercy on their short-sighted souls.

    #31
  32. J. Michael

    The Sierra Club, the EPA and Obama won’t be happy until we are all sitting on the curb in the dark. And don’t you dare start a little fire to keep warm, it might give off a little smoke. We need to be rid of all of these people.

    #32
  33. tellitlikeitis

    hey bayshore, burn cleaner doesn’t make it cleaner.
    can you say, methane.

    #33
  34. SaltWaterCroc

    How can anyone side with the EPA over professional polluters? If we want dirty power, we should be willing to breath dirty air, and the surrounding states can take a hike. We aren’t mandating they breathe our air, and our health care is worse than theirs, so they should take their EPA and go elsewhere. Wait ’till Perry’s President; then the entire country will get our air and they’ll LOVE it!

    #34
  35. Ed C

    So if they shut down this old dirty plant, how are all the treehuggers going to charge their fancy electric cars? LOL

    #35
  36. Rudy Gonzales

    Why do big companies shut down operations to convert to another source of energy production? Why do big Coal operations think they are above the law that everyone else complies with? Who appointed them the law in their domain? Are they that well connected to the big monies to think they will get their way in court? Is it the loss in bottom line profits that drive these companies or the health and welfare of the entire nation? Are these huge corporations out for themselves or the general population of the world. Do the big boys think there are no ramifications to their continued spewing of coal residue into the atmosphere? Do the heads of these big companies have that much influence with ERCOT that they can command ERCOT to jump as ERCOT asks how high?

    #36
  37. ntangle

    It’s not the EPA that is doing it, it is the price of natural gas. It is much less expensive for electric generators to use natural gas than it is coal.
    —————–
    If what you’re saying were true, many would use gas to fuel all their generation, baseload as well as ramp. But of course, it isn’t true. Gas has been around $5 / MMBTU for electric utilities during 2011. And coal, about $2.35 / MMBTU.
    Coal’s price has been relatively stable, while gas has been all over the map historically, i.e., over twice as much in the past as it is now.
    http://www.eia.gov/cneaf/electricity/epm/chap4.pdf

    #37
  38. A concerned Mom

    It’s amazing…I’d rather loose 500jobs (you can get another one)
    than 500 and more live from the dirty polluted air. Where are our real values…I don’t want my kids drinking the dirty water these plants dispose or breathing the contaminated air.

    #38
  39. Mike H.

    “500 jobs vs. 13,000 to 34,000 LIVES saved per year? Are we really going to debate that tradeoff?”

    There’s already a move in Congress to make pipelines laws weaker, with the finances of the pipeline companies in mind, PA Rep. Shuster’s Office stated that fact. So, yes, lives are of lower value than profits to a number of politicians.

    Gas is more expensive for MMBTU, but, do you need to scrub the exhaust on it for SOx & flyash?

    And, what’s to keep them from selling that lignite to China?

    #39
  40. Mojitos4All

    rts
    September 12, 2011, 1:31 PM
    The problem isn’t the EPA or coal. NRG has no problem meeting the required pollution levels “The compliance costs are not expected to be material and there are no plans to close units or join in the Luminant lawsuit.” The problem is speculators and a leveraged buy-out by Luminant. Little or no money down, and high interest rate loans, hoping on higher prices to bail them out. Put the problem where it belongs rip-off artist hoping to get rich with other peoples money and knowing little about the business they are getting into, not coal, not EPA.
    *****
    Warrants being repeated. Some people do not want to read the facts.

    #40
  41. Ernest Brister

    Luminant has known this was coming for several years. What kind of poor business is it to not take into account changes you know are coming and plan acordingly. Like building new and compliant plants. The demand for electric power is large and growing, so they know they will not lose money. And don’t blame Obama, as the EPA was created by a Republican President named Nixon.

    #41
  42. Michael

    The EPA is a waste of the tax payers money. They do a lot more damage then good. We already have more than enough laws on the books.Don’t shut down power plants…. Shutdown the EPA!!!!

    #42