Vistra Energy is Closing Two More Giant Uneconomic Coal (Lignite) Plants in Texas

Coal and Related Carbon Resources / Exploration, Production, Coal Ash, & Rare Earths

Date posted: 10/24/17

Sonal Patel further confirms that Vistra Energy moved to halt a financial hemorrhage stemming from unprofitable conditions in the Electric Reliability Council of Texas (ERCOT), announcing plans to shutter two more coal-fired power plants—the 1.1-GW Sandow Power Plant (which includes a 2009-built unit) and the 1.2-GW Big Brown plant—in early 2018. The company’s decision made public on October 13 comes on the heels of an announcement last week by Vistra Energy subsidiary Luminant to shutter its 1.9-GW coal-fired Monticello plant in Titus County, Texas. Vistra Energy said the coal plant closures are necessary because they are “economically challenged in the competitive ERCOT market.” Specifically, it said, “Sustained low wholesale power prices, an oversupplied renewable generation market, and low natural gas prices, along with other factors, have contributed to this decision.” Terminating years of service is a difficult announcement to make,” said Vistra Energy President and CEO Curt Morgan. “It is never easy to announce an action that has a significant impact on our people. Though the long-term economic viability of these plants has been in question for some time, our year-long analysis indicates this announcement is now necessary.” The Sandow plant in Bastrop County, central Texas, has two units, one built in 1981, and the other in 2009. The Big Brown plant in Freestone County also has two units that were brought online between 1971 and 1972. Sandow and Big Brown are fired with lignite, though Big Brown supplements with Powder River Basin coal. Vistra also said it entered into a contract agreement with Alcoa to terminate a long-standing power and mining agreement for the Sandow site. Alcoa will make a one-time payment to Luminant. The Three Oaks Mine in Bastrop County, which supports Sandow, will also close. “The settlement follows a decrease in wholesale power prices in ERCOT and the prior curtailment of Alcoa’s smelter operation next to Sandow,” the company explained. “The contract has helped shield Sandow from significant exposure to the downturn in the wholesale power market; however, the standalone economics of the Sandow complex no longer support continued investment in the site in this low wholesale power price environment.” Luminant has filed a 90-day notice of suspension for the Sandow plant, which has 450 employees. If ERCOT determines it isn’t needed for reliability, the plant will cease operations on January 11, 2018.