Thursday, March 29, 2018

Half of U.S. coal-fired power plants were unprofitable in 2017, study says; rate regulation helped them stay open

Monthly operating margins for the average coal plant. (Bloomberg graph)
About half of U.S. coal-fired power plants didn't earn enough revenue in 2017 to cover their operating expenses, according to a Bloomberg New Energy Finance study. "The problem is particularly bad in Florida, Georgia and elsewhere in the Southeast, where the distance from major coal mines drives up prices. The study examined the monthly economic performance of every U.S. coal plant in operation since 2012," Joe Ryan reports for Bloomberg.

Plants that didn't make enough money were able to stay open because most were located in areas where rates were determined by regulators rather than market forces. Regulators and utilities often keep struggling plants open to ensure stability of the electricity grid, but grids may face upheaval as more unprofitable plants close and natural gas continues to have a price advantage over coal.

The report's authors, William Nelson and Sophia Lium, wrote in the study that they were "awestruck by the resilience of U.S. coal . . . Plants persist even when they cost more to run than replace."

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