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Luminant Considers Mothballing Capacity due to EPA Rules
July 14, 2011
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Luminant said in an SEC filing yesterday that it is considering mothballing certain of its legacy lignite/coal-fueled generation due to the EPA's Cross-State Air Pollution Rule (CSAPR).
Luminant did not provide any projections of the amount of capacity it expects to be mothballed.
Although the CSAPR establishes a "cap and trade" system intended to aid compliance with the emissions budgets, Luminant does not expect sufficient liquidity in emissions trading markets to enable the purchase of emissions credits as a significant element of its near-term compliance strategy. Due to the short timeframe for compliance with the emissions budgets in the CSAPR (i.e., by January 1, 2012), the permitting, engineering, procurement and construction of the new environmental control equipment (or boiler equipment component replacements to enable switching to lower-sulfur coal while maintaining historical power output) necessary to comply with the CSAPR will not be feasible before the start of the compliance period, Luminant said.
In order to ensure near-term compliance with the CSAPR, the primary options Luminant has identified are:
(i) reducing the operating levels at certain legacy lignite/coal-fueled generation facilities (potentially in conjunction with fuel switching and the mothballing or closure of related mining operations)
(ii) conducting seasonal or temporary shut-downs of certain legacy lignite/coal-fueled generation facilities and related mining operations,
(iii) installing and operating dry sorbent injection systems for sulfur dioxide emission reductions at certain legacy lignite/coal-fueled generation facilities (potentially in conjunction with reducing operating levels and/or fuel switching and mothballing or closure of related mining operations) and
(iv) mothballing certain legacy lignite/coal-fueled generation facilities and related mining operations.
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