Coal's Decline Spreads Far Beyond Appalachia

Date : 20/06/2017 @ 04:23
Source : Dow Jones News

Coal's Decline Spreads Far Beyond Appalachia

By Jon Kamp and Kris Maher 

SOMERSET, Mass. -- Far from the mines of Appalachia, the decline of coal is hitting communities that relied on coal-fired power plants for jobs and income.

During the past five years, roughly 350 coal-fired generating units shut down across the U.S., ranging from small units at factories to huge power plants, according to data from the Energy Information Administration. A single power plant could have one or several units.

Many of these plants were built near the source in Appalachia and western states. But generators built in far-away places like New England have also turned off.

The shutdowns can cost communities both high-paying jobs and important sources of tax revenue. Natural-gas-fired plants have quickly mushroomed up across the U.S. to replace the retiring coal generators, but those plants need far fewer workers -- one for every five that worked at a coal plant, by some estimates.

A 54-year-old coal-fired plant here stopped operating three weeks ago, and local officials started raising property taxes several years back to compensate for lower revenue from the town's largest taxpayer as production slowed.

In Adams County, Ohio, where Dayton Power & Light has said it will shut two coal-fired plants, county auditor David Gifford sees a host of knock-on effects including layoffs for public employees, program cuts for seniors, libraries and schools, as well as a steep hike in property taxes. The plants contributed more than 30% of the county's $27 million in total tax revenue.

"If the power company shuts their doors, then John Doe on the street is going to have to pay for it," Mr. Gifford said.

A DP&L spokeswoman said the company decided the plants wouldn't be economically viable beyond mid-2018, and "we faced an important and difficult outcome."

It is a scenario being played out elsewhere as more coal-fired power plants retire, squeezed out in part by new, cheaper-to-run natural gas-fired plants.

Two entire plants in New Jersey also closed in June, and more coal units are scheduled to close in places like Tennessee and Michigan. Carbon County, Utah, is still smarting from the loss of a small coal-fired plant two years ago, said Seth Oveson, the county clerk and auditor.

Cassville, Wis., lost 55% of its tax revenue when two former coal plants on either side of town, including one that was converted to burning biomass, shut within four months of each other in 2015, said Keevin Williams, president of the village of 950 people.

Mr. Williams himself worked at one plant for 31 years before retiring. Others moved away to find work. The village on the Mississippi River has cut staff and put off projects, he said.

"We're a small community. When you lose 90 jobs, that's 10% of your population," Mr. Williams said. "That's made things very tough."

Last year, natural gas surpassed coal for the first time in U.S. electricity generation, providing 34% of the nation's power, versus 30% for coal, according to the EIA. As recently as 2011, coal provided roughly 43% of generation.

The reduction in coal-fired power underscores the challenge for President Donald Trump in fulfilling his promise to aid a flagging coal-mining industry because power plants are by far the main consumers of American coal.

Mr. Trump's moves to undo environmental regulations, and the recent withdrawal from the Paris climate accord, are unlikely to reverse the closure of coal-fired plants, according to Adele Morris, policy director for the Climate and Energy Economics Project at the Brookings Institution. Ms. Morris said their closure is driven mainly by cheap gas and a federal rule limiting mercury and other pollutants.

"There's an increasing awareness that coal will not return to its former glory," said Charles Patton, head of external affairs at American Electric Power Co., a Columbus, Ohio, utility that has shut nine coal-fired power plants since 2011.

Neither the EIA nor the Bureau of Labor Statistics track how this shift has affected coal-fired-plant workers. Coal-fired plants require more staff than typically newer and simpler gas-fired units, according to workers and utilities. A spokesman for the Tennessee Valley Authority, which has also been retiring coal units, said a coal plant could employ roughly 150 to 250 while a new gas plant might need 35 workers.

In Ohio's Adams County, where 25% of the 28,000 residents live below the poverty line, the prospect of losing the two plants is devastating.

Mr. Gifford, the auditor for the county, said that if the power plants close, the county could be forced to raise the property-tax rate at least 500% in order to maintain school-district debt payments.

Joel Hanson, a veteran at one plant, said he had thought he would be able to work through to retirement at the power plant. Now he may uproot his wife and two young children from the nearby town of Manchester. "It's like having the rug pulled out from under you," Mr. Hanson, 43, said. The Utility Workers Union of America, which represents workers at the plants, is trying to find investors to buy them, according to the union.

In Somerset, Brayton Point was the last coal-fired power plant in Massachusetts, and one of just four left in New England. Prior plant owner Energy Capital Partners decided in 2014 to shut the plant due to competition from cheap gas, and current owner Dynegy Inc. followed through.

The plant paid more than $13 million in taxes as recently as five years ago, but payments have declined alongside power production since then, and the town of about 18,000 people has had to shift the burden to other taxpayers, town Finance Director Joe Bolton said. Somerset already lost a smaller coal-fired plant in 2010.

Electrician David Kutz, a 32-year Brayton Point veteran and area homeowner, will receive severance, but said he plans to find new work to help cover medical insurance.

"This plant put so many kids through college, bought so many houses, paid so many taxes," said Mr. Kutz, who is 59 years old. "It's hard now seeing people go."

Write to Jon Kamp at jon.kamp@wsj.com and Kris Maher at kris.maher@wsj.com

 

(END) Dow Jones Newswires

June 19, 2017 14:08 ET (18:08 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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