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Will coal plant closures affect energy prices?

By: Brett Herrmann |

Oglesby mayor Dom Rivara had a warning for his city’s residents at a past council meeting. The recent shutdown of four coal plants in Illinois is just the beginning.

“We need baseload plants in this country,” Rivara said. “It’s only the tip of the iceberg and there will be more of this.”

In August, Vistra Energy announced it would shut down the Hennepin Power Plant, along with coal-fired plants in Havana, Canton and Coffeen near St. Louis.

This move came as a result of new rules handed down by the Illinois Pollution Control Board in an attempt to control the worst-polluting plants in the state. Vistra said it would work to provide career training for the employees that lost their jobs and work to retool the plants to produce renewable energy such as solar.

But how will the closures affect prices on the consumer end?

“We wouldn’t expect there would be much of an impact on price,” said David Kolata, executive director of the Citizens Utility Board, who added there is a large energy surplus in Illinois at the moment. “Supply greatly exceeds demand.”

Illinois residents paid 13.24 cents per kilowatthour for electricity in June 2019, compared to 12.56 per kilowatthour in June 2018, according to the Energy Information Administration. June prices were also comparable to other states in the Midwest, with Illinois having lower electricity costs per kilowatthour than Michigan, Ohio, Wisconsin and Iowa.

Coal on the decline

Kolata said other forms of energy such as natural gas, wind and solar are on the rise and are expected to help make up the difference in the dwindling amount of coal production in Illinois and across the country. However, in 2017, coal production accounted for about 43% of the overall energy production in Illinois, according to the Energy Information Administration.

The total number of British thermal units (Btu) Illinois produces each year has not gone down considerably since the 1960s. Production peaked at 1,446 trillion Btu in 1967. However, that year renewable energies and nuclear energy combined made up only about 2.5% of Illinois energy production.

Fast forward to 2017 and Illinois is still producing 1,079.6 trillion Btu in coal-fired energy, but nuclear accounted for 40% of Illinois’ total production while renewables made up about 15%.

Not just Illinois

Illinois had 15 coal-fired plants before the closure of these four. Vistra Energy stated the plants combined for about 2,000 megawatts of baseload power.

“We’ve seen plant closures of this type before,” Kolata said.

But Rivara said Texas has been hit with coal plant closures too, and that sparked concerns of higher prices on the consumer end, a Public Utility Commission spokesperson told the Houston Chronicle.

So far, that does not appear to be the case in Illinois. For Oglesby (also Peru, Princeton and Ladd), the Illinois Municipal Electric Agency is their energy supplier and they do not expect much of an impact from the closures.

“The closure of over 2,000 MW of baseload power could very well have an impact of slightly higher energy prices in the market as a whole. However, we do not predict an increase for the IMEA municipalities as we have a diversified power supply portfolio,” said Staci Wilson, director of government affairs for the IMEA.

Ameren also predicts that energy prices on the consumer end should not change for customers in the area.

“Ameren Illinois is a delivery-only company and power is purchased for us by an independent state agency. The closures are not expected to impact the availability of cost-competitive power that we deliver to our customers,” said Ameren Illinois spokesperson Tucker Kennedy.

Vistra Energy did not offer a comment on how consumers might be impacted by the closures. They referred questions to the grid operator MISO Energy. MISO did not respond by press time.