Beaver power plant weighs shift to gas

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A small coal-fired power plant in Beaver County may give natural gas a spin before its owner decides whether to shut it down in 2017.

After losing the plant's only electric customer last year, Virginia-based AES Corp. says it's looking at all options for the 125-megawatt cogeneration plant in Potter, but company spokesman Rich Bulger said no "serious discussions" about switching to gas have taken place.

A number of coal-powered plants have explored the possibility of shifting to natural gas to take advantage of its relatively low price and cleaner emissions, though few have made the switch.

In April, AES asked the Pennsylvania Department of Environmental Protection for permission to install and operate burner inserts in three boilers that would allow AES Beaver Valley to burn gas in addition to, or instead of, coal. The state is poised to issue the permit in early February.

That request came one month before a capacity auction hosted by PJM Interconnection Inc, the Valley Forge, Pa.-based grid operator for Pennsylvania and 12 other states, threw a wrench in AES's plans.

The Beaver Valley plant didn't fare well in that auction, which secures commitments from generators to be available to feed into the grid. The plant's prices were too high and it was not picked as a baseload generation supplier, deflating the gas-burning plans and throwing the plant's future into question, AES spokeswoman Amy Ackerman said.

Keeping its options open, AES filed late last year with PJM, which coordinates the flow of electricity on the grid, for the right to deactivate the plant June 1, 2017, even as it proceeded with the state permit process.

As a cogeneration plant, AES Beaver Valley, which employs 35 people, produces electricity and steam. It sells the latter to two nearby chemical companies, BASF and Nova Chemicals.

Pace Markowitz, a spokesman for Nova, said the chemical maker has been notified that its steam contract would end in July, although Ms. Ackerman at AES said service could possibly continue under a new contract.

AES Beaver Valley took advantage of a 1978 federal law designed to encourage alternative power sources by requiring utilities to buy the electricity produced by cogeneration plants.

As such, it signed a power purchase agreement with West Penn Power in 1987 that was supposed to expire at the end of 2016. But the utility, which became part of Akron-based FirstEnergy Corp., bought out the contract in January 2013. FirstEnergy has its own generation plants, some of which it chose to shutter, citing low demand and low prices.

FirstEnergy spokesman Todd Meyer said the company had been paying a higher price for electricity from the Beaver Valley plant than it could from other sources, so it negotiated an early end to the contract.

That meant AES Beaver Valley lost its main electric customer. And there aren't too many other takers to pick up the slack. Now, the facility is being used as a so-called "peaking plant," supplying power directly to the grid during high demand times only.

Meanwhile, PJM stated on its website that closing the plant in 2017 would create reliability issues for the grid, but none that couldn't be addressed by the proposed closing time.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455


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