Texas Coal Plant To Shut Down by 2020

A northern Texas coal fired plant is adding itself to a growing list of coal refineries shutting their doors. Officials announced  that the Oklaunion plant based in Vernon, Texas, will retire in 2020, citing a failure to compete in the energy market. 

The owners voted to close the plant after coming to terms with the fact that the 700-megawatt coal plant was not competitive in the state's energy market run by the Electric Reliability Council of Texas (ERCOT). 

The plant is at least the fifth one in Texas to close, or to announce plans to close, this year. It joins a number of other coal plants nationwide that are shutting down following a struggle to maintain a profit.

https://www.chron.com/business/energy/article/Texas-coal-plant-to-shut-down-by-2020-13255710.php

 

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The main reason is probably a natural gas. We are in a major gas boom right now, and over the last few years  a lot of coal plants are either shutting down or converting to gas. It's just straight up cheaper to run a gas plant now, and can offer a better deal for electricity than the coal fired plants.

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Also the overoll costs of generating wind and solar energy are much less than coal. Their big advantages come especially during natural disasters. In that case when such a disaster takes down a coal plant power, it takes weeks or months to get back online and at much higher costs. While renewable power plant will be back in a few days at relatively less costs. 

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Texas has increasing amounts of wind power. Once running that is cheaper than coal  and in the Texas energy market prices can go down due to over supply. A coal plant takes time to spin down and spin up. And the full non-externalized costs of coal are significant.

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Coal is definitely winding down, but I think it will be at least another 20-30 years before it dies out completely for power generation. I think in some regions it's still profitable to operate coal plants. And there's still a lot of other industries like steel production that will still be using coal for a very long time too.

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The coal plant operators are basically hostages of the railroads that haul the coal, who have a monopoly on the rail spur to the plant and can thus charge whatever they want.  I remember visiting with a municipal electric department in central Nebraska, and those fellows told me they spent $7 million of their own cash to build a rail spur to a second trunk carrier, so as to break the monopoly pricing of the first carrier.  I forget the details but think it might have been Union Pacific and the Santa Fe RR.  The managers got tired of being extorted on the freight bills and made that rail-building decision in response, which by any standard is extraordinary. 

This is a weakness of the way US railroads are organized, as private corporations owning the rails.  It makes no logical sense; far better to have one entity, likely a government, own the actual rails, and then let anybody go form a RR and buy locomotives and cars, then pay a fee to the rail owner/manager to run their train over the rails, probably a fee of so much a ton mile, that sort of thing.  That way, the rail network is open to any competitor, just as say a bus operator or an air carrier uses the public routes, but owns or lease their individual airplane and flies the passengers.  Using that model, you get lots of entrants, lots of service models, and lots of price competition.  Why Americans continue to stick to this 1700's model of railroading is beyond me. 

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9 minutes ago, Jan van Eck said:

The coal plant operators are basically hostages of the railroads that haul the coal, who have a monopoly on the rail spur to the plant and can thus charge whatever they want.  I remember visiting with a municipal electric department in central Nebraska, and those fellows told me they spent $7 million of their own cash to build a rail spur to a second trunk carrier, so as to break the monopoly pricing of the first carrier.  I forget the details but think it might have been Union Pacific and the Santa Fe RR.  The managers got tired of being extorted on the freight bills and made that rail-building decision in response, which by any standard is extraordinary. 

This is a weakness of the way US railroads are organized, as private corporations owning the rails.  It makes no logical sense; far better to have one entity, likely a government, own the actual rails, and then let anybody go form a RR and buy locomotives and cars, then pay a fee to the rail owner/manager to run their train over the rails, probably a fee of so much a ton mile, that sort of thing.  That way, the rail network is open to any competitor, just as say a bus operator or an air carrier uses the public routes, but owns or lease their individual airplane and flies the passengers.  Using that model, you get lots of entrants, lots of service models, and lots of price competition.  Why Americans continue to stick to this 1700's model of railroading is beyond me. 

Jan Van Eck,

This comes from the "private is always best" mentality in the US.  Conservatives would complain that taxes were being spent to maintain the rail lines, and if the prices to use the rail lines were high enough that taxes to maintain the lines were not necessary, the rail carriers would claim they were being extorted by the government (or whatever entity owns the rails) and being charged too high a price.

I like your idea, it would work in Europe, but in the US rail has always been messed up, probably this will continue.

The main reason coal is having a problem is that Natural Gas fired electricity is far cheaper in the US due to very low prices for natural gas.  Coal cannot compete in most cases, perhaps cheaper rail would help a bit.  Coal is expensive to move.

Note that pipelines are privately owned, much like rail, it is not a problem for natural gas.

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ERCOT is more the distributer, and owns/runs the grid. Production is mostly for-profit in Texas. Depending on where you live i Texas depends on who you buy power from, and a lot of power is from the wholesale market. Coal struggles to compete with gas. Especially in a land with lots of gas, and pipelines. Drive thru the Permian Basin at night, lit up like a city with flaring. 

And I agree with JV, there are what economists call natural monopolies, where government is best. And yes, the USA has this blind fear of it. But in some situations competition will only create nasty effective monopolies and oligarchs. When you have a situation of many buyers and sellers, then nothing is better than the free market. When one side, buyer or seller, has most of the power, the free market solution is a mirage sold to the public.

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4 hours ago, mthebold said:

 

I agree that, assuming perfect government behavior, government-owned railroads would lower freight costs.  In practice, I suspect the government would do exactly what private owners of railroads do: keep prices barely low enough to prevent competition.  The end result would be:

1)  ... rail car operators would barely scrape by.  I.e. their current profits would be funneled to the rail bureaucracy. 

2)  ... the freight customers' current profits would be funneled to a bureaucracy. 

3) ... money from local communities would be funneled to the rail bureaucracy. 

4)  ... some communities would gain at the expense of others, exacerbating economic inequality. 

5)  Innovation would grind to a halt and specific communities would suffer ....  In the long run, everyone would lose. 

Every market player tries to control prices.  The question is not whether there will be a dominant player, but the extent of that player's power.  Government monopolies are the most powerful, ruthless, and dangerous of players; how are they preferable to corporate monopolies? 

WOW.  I had not thought of any of that.  But you are absolutely correct:  letting govt bureaucrats have that control would end up, in the context of a market economy, being disastrous.  Kudos to you for thinking this one through!  

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On 9/26/2018 at 6:19 AM, Sofia said:

A northern Texas coal fired plant is adding itself to a growing list of coal refineries shutting their doors. Officials announced  that the Oklaunion plant based in Vernon, Texas, will retire in 2020, citing a failure to compete in the energy market. 

The owners voted to close the plant after coming to terms with the fact that the 700-megawatt coal plant was not competitive in the state's energy market run by the Electric Reliability Council of Texas (ERCOT). 

The plant is at least the fifth one in Texas to close, or to announce plans to close, this year. It joins a number of other coal plants nationwide that are shutting down following a struggle to maintain a profit.

https://www.chron.com/business/energy/article/Texas-coal-plant-to-shut-down-by-2020-13255710.php

 

This article seems to refute some of the assumptions about coal declining soon. https://oilprice.com/Energy/Crude-Oil/Coal-Use-Rises-As-Renewables-Fall-In-US-Electricity-Generation.html

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3 hours ago, mthebold said:

Jan, I will take that as a high compliment.  Thank you.

Yup, it was intended as the Ultimate Compliment!  

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9 hours ago, mthebold said:

The decline in coal is not, however, a foregone conclusion.  Manufacturing is returning to the US, consumer confidence is up, the population is increasing, the MATS closures are behind us, and regions that embraced renewables are discovering the hidden costs thereof.  We may not see an immediate increase, but the long-term trend looks good for coal.

They have office space available, with your name on it, at the White House.  Please report for duty!

Seriously, I have only recently begun to pay attention to what type of fuel is used for power generation back in my home area and I was quite surprised to find out it is mainly coal.  I always paid a sort of distant attention to the debates that were going on back there and knew that they had some really rough times, with the communities rebelling against government and the management of the power plants, but I didn't know the details.  Digging into it was easy enough, what with all of the public records of meetings and data available to the general public.  It turns out that the rough times were when new technology was being installed in the various plants and the inept management that was estimating the costing to the the consumers.  Turns out that coal is still quite viable, the plants now operate at the highest standards of low emissions, they are clean and, once the management was changed out with people who have training in the new realities/technologies, the costs came down dramatically as well.  Your comments here further explain and fill in some of the gaps in my understanding of it all.

I'll admit, I thought Trump sounded like an idiot when he was talking about making coal great again, and I'm sure there are some on this forum that still think he is, but, again, your comments show why (I hope) he is not entirely wrong and may actually be on to something well thought out and workable, if not actually highly efficient and profitable.

Thank you for a well written contribution!

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The only realistic way to deal with Washington and the octopus of the Gigantic Administrative State is to dismiss hundreds of thousands of bureaucrats. 

The bureaucrats are now so numerous that they can no longer even buy a home within 60 miles of DC.  Each morning you see this huge caravan of autos heading North from Richmond, Virginia up the I-95, and where it gets close to DC there is that extra center section of three or four additional lanes, all choked up with traffic, and then the mass of other lanes, I think the total is something like nine lanes across, all trying to get over the bridges into the City so that the bureaucrats can start their day, which consists mainly of going to meetings and reading and writing Memos to each other.  I get the impression that there is very little actual "work" going on; these bureaucrats have created these Empires and zealously guard them against other bureaucrats' attempts to poach territory, and you get these cat-fights between the competing camps.  And nobody is thinking about the taxpayer. 

If I were in charge in DC, I would be dismissing bureaucrats at the rate of then thousand a month to start.  Even if you have to pay them to stay home, that is cheaper than having them all come into DC and being Administrators, thus hampering innovation and entrepreneurship in the countryside.  But, I am not in charge.  Oh, well. 

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And plans have been announced that a natural gas plant will be built around Willis, TX, just north of Houston. I would assume that means when the new plant is ready that the coal plant will shut down.

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15 hours ago, Jan van Eck said:

The only realistic way to deal with Washington and the octopus of the Gigantic Administrative State is to dismiss hundreds of thousands of bureaucrats. 

The bureaucrats are now so numerous that they can no longer even buy a home within 60 miles of DC.  Each morning you see this huge caravan of autos heading North from Richmond, Virginia up the I-95, and where it gets close to DC there is that extra center section of three or four additional lanes, all choked up with traffic, and then the mass of other lanes, I think the total is something like nine lanes across, all trying to get over the bridges into the City so that the bureaucrats can start their day, which consists mainly of going to meetings and reading and writing Memos to each other.  I get the impression that there is very little actual "work" going on; these bureaucrats have created these Empires and zealously guard them against other bureaucrats' attempts to poach territory, and you get these cat-fights between the competing camps.  And nobody is thinking about the taxpayer. 

If I were in charge in DC, I would be dismissing bureaucrats at the rate of then thousand a month to start.  Even if you have to pay them to stay home, that is cheaper than having them all come into DC and being Administrators, thus hampering innovation and entrepreneurship in the countryside.  But, I am not in charge.  Oh, well. 

I would move D.C to rural N.E. Oklahoma, near the population center of the USA which is now near Branson MO and is moving Southwest. 

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Coal has one big problem. Pollution of both air and water. The true cost of any energy source has to factor all costs in. That is what kills nuclear and will diminish coal over time. 

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Just now, ronwagn said:

I would move D.C to rural N.E. Oklahoma, near the population center of the USA which is now near Branson MO and is moving Southwest. 

Yes, the Okie's would deal with them in a fair and just manner.  Oh, you mean for the traffic congestion issues.  Sorry.

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13 hours ago, SERWIN said:

And plans have been announced that a natural gas plant will be built around Willis, TX, just north of Houston. I would assume that means when the new plant is ready that the coal plant will shut down.

Could be, or it could be that the natgas plant will be used for what I believe is called "gapping", where the natgas plant is used when there are gaps in necessary available supplies.  It all depends on the economics.

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DW, my intentions would be to put our national government more in line with the average citizen while providing inexpensive land for a new national capital. It would be a planned community built over time in a gradual manner. 

Washington D.C. is very vulnerable to attacks of many forms because it is too centralized without sufficient protection. We should physically decentralize government. We would also get rid of a lot of expensive salaries of people who don't want to live there. 

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1 hour ago, ronwagn said:

DW, my intentions would be to put our national government more in line with the average citizen while providing inexpensive land for a new national capital. It would be a planned community built over time in a gradual manner. 

Washington D.C. is very vulnerable to attacks of many forms because it is too centralized without sufficient protection. We should physically decentralize government. We would also get rid of a lot of expensive salaries of people who don't want to live there. 

Good luck with that.

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Reply to PB because no such plants exist in actuality. Natural gas does. 

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DW, a second term for Trump might just start things in that direction. It is a logical thing to do IMHO. 

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8 minutes ago, ronwagn said:

DW, a second term for Trump might just start things in that direction. It is a logical thing to do IMHO. 

HI ronwagn.  Are you having trouble responding to individual posts?  Did you know you just click on the word Quote under anyone's comment and it will respond directly to that comment?  Just checking.

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It seems superfluous in some cases but will try to use it more. 

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3 hours ago, mthebold said:

What if we returned power - and bureaucrats - to state capitals, as the founders intended? 

That would be even better, but I don't see it happening either. 

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