Coal Tattoo

The truth about coal’s future in Southern W.Va.

Share This Article
Share This Article
[wp_social_sharing social_options='facebook,twitter,googleplus,linkedin,pinterest' facebook_text='Share on Facebook' twitter_text='Share on Twitter' googleplus_text='Share on Google+' linkedin_text='Share on Linkedin' pinterest_text='Share on Pinterest' icon_order='f,t,g,l,p' show_icons='1' before_button_text='' social_image='']

It’s always interesting to take a closer look at what officials from the coal and utility industries are saying about the same topic to different audiences.

I was reminded of that this morning when I re-read a piece that the State Journal’s great reporter, Pam Kasey, put on line yesterday. The story was headlined Coal will be just 50 percent of AEP generation in 2020: CEO, and in it, Pam reported:

American Electric Power is “repositioning its assets” for a “more sustainable fuel mix,” according to a Leadership Message from President and CEO Nicholas K. Akins.

Akins’ message was issued April 24 in conjunction with the utility’s annual meeting in Tulsa, Okla.

It doesn’t simply mean a shift from coal to gas, although that’s a large element.

“Several factors are driving us in this direction, including new environmental regulations; the economics of coal versus natural gas; the operating cost, age and efficiency of some coal units; increased competition; and grid reliability,” Akins wrote.

“We will retire more than 5,100 megawatts of coal-fired generation and retrofit nearly 11,000 megawatts with new, advanced pollution controls or upgrade existing control equipment,” he wrote. “Additional coal-fired generation may be refueled with natural gas.”

And the bottom line:

“By 2020, we estimate natural gas will account for 27 percent of AEP’s generating capacity, compared with 24 percent today,” he said.

Coal will fall to 50 percent in 2020 from 67 percent in 2011, with the rest made up of nuclear, renewables, hydro and pumped storage and energy efficiency.

“This effort to create a more sustainable balance of our generation resources will be very challenging and expensive but will provide long-term fuel stability and allow us to adapt to the major upcoming market and operational changes,” he said.

What struck me was the tone of the comments regarding coal, when compared to what Nick Akins had to say during a visit to Charleston not so long ago. As reported in the Gazette:

Although the amount of energy produced by coal will decrease in the nation — from 45 percent today to 39 percent by 2020 — a top electric utility company CEO said there is definitely a future for coal.

“Coal is naturally going to come down, natural gas will be the choice, but they’re really marginal,” said Nick Akins, president and chief executive officer of American Electric Power. “Once technology is proven, you’ll start to see coal come back. We still need coal . . . . If someone is trying to eliminate that, it’s just not going to happen.”

 Perhaps I’m reading too much into it, and perhaps part of it was the way the stories were reported by two different reporters (neither of which was me — and I didn’t attend Akins’ appearance in Charleston or the company’s annual meeting). But it struck me as a bit of playing to your audience. To shareholders worried about their bottom line, the message was that AEP is diversifying and moving away from what is fast becoming a costly and out of favor fuel. To West Virginia business leaders — always a crowd who wants to hear how great a future coal has — the message was to not worry and be happy. Nothing to see there with those projections of huge declines in Central Appalachian coal production. Just move along.

Then again, sometimes I wonder about AEP.  For example, when they talk to leaders and the public in places like West Virginia, do they focus much on stories like this one:

American Electric Power Co., the largest U.S. coal consumer, reduced by 13 percent the amount of coal-fired generation it will shut because of new environmental regulations, saying it may get state support to spend $940 million to keep a Kentucky unit operating.

The company still plans to close power plants with about 5,138 megawatts of capacity, Chief Executive Officer Nick Akins said at an investor conference in New York today. The Columbus, Ohio-based company said in June that new U.S. Environmental Protection Agency rules would force it to retire as much as 5,909 megawatts of capacity.

The difference stems from the company’s decision in December to seek a 31 percent rate increase to fund environmental equipment needed to keep its Big Sandy Unit 2 in Kentucky operating, Akins said later in an interview. State regulators have indicated American Electric may be able to recover from customers the almost $1 billion needed to keep the unit operating, he said.

And look at what Nick Akins told AEP shareholders back in February:

So in the fleet repositioning, we’re estimating now that it’ll be around $5 billion to $6 billion for the EPA-related investments associated with generation. That has been adjusted a little bit because we did get a , one positive outcome out of the EPA rules and that was around a particular matter. One of the things that we had talked about previously was this notion that we were having to move from 99.6% efficiency to 99.8% efficiency and it was a cost of $600 million to $700 million. Well, the EPA did resolve that issue by only going to filterable in particular as opposed to condensable and filterable. So that helped us, it took about $600 million out of the capital plan. So that’s been very positive for us.

You don’t hear nearly as much about instances where companies engage with EPA and the agency reaches a satisfactory compromise.

But most importantly, you don’t hear much of anything out of West Virginia’s political leaders about their plan for dealing with the coming reductions in coal production from the state’s southern counties. Shouldn’t the media be asking gubernatorial candidates about that, instead of wasting time about whether one particular federal employee should be fired?