Federal environmental mandates force Alabama Power to close coal units
Regulations driving changes, impacting costs and workforce
Federal environmental mandates are forcing Alabama Power to close two coal-fired generating units at Plant Gorgas and reduce or eliminate the ability to use coal at Plant Barry and Plant Greene County by 2016.
Because of rules tied to federal environmental regulations, Alabama Power will close two smaller coal units at Plant Gorgas in Walker County. Two more units at Plant Barry, in Mobile County, will cease using coal but will remain available on a limited basis using natural gas. A third coal unit at Barry will begin using gas, but its capability will not be impacted as significantly as the other two units.
Another significant change will take place at Plant Greene County, where the company will cease using coal and switch to natural gas. Because of this transition, the plant is expected to reduce its workforce by about half. The reduction in workforce is expected to be completed through attrition and transfers, avoiding layoffs.
“Federal environmental mandates are forcing us to change how we generate electricity for our customers,” said Matt Bowden, Alabama Power’s vice president for environmental affairs. “They are putting new restrictions on our ability to provide our customers with the energy they need in a cost-effective manner.”
During the past decade, Alabama Power has spent about $3 billion to meet federal environmental mandates. The company is in the process of spending another $1 billion to comply with new federal environmental regulations tied to air emissions. Further spending could be required to meet future federal environmental regulations tied to water, land and coal combustion byproducts.
On top of these regulations, the U.S. Environmental Protection Agency has proposed the first-ever rules related to greenhouse gases for existing power plants. If these rules are put in place, they could force the company to make additional costly changes to meet federal mandates.
Since 1996, Alabama Power has reduced emissions of sulfur dioxide and nitrogen oxides by more than 80 percent. Ongoing projects to add environmental technology on coal units at Plant Gorgas and at Plant Gaston in Shelby County are expected to further reduce emissions.
The plant changes announced today are expected to be completed by 2016.
Although the company is being forced to reduce its use of coal and make other changes, Alabama Power is committed to keeping all its generating facilities open – to the extent doing so is cost-effective for customers.
“These facilities are vital to the communities they serve, providing quality jobs and supporting local economies,” said Jim Heilbron, senior production officer for Alabama Power. “Many of our plants are located in rural communities, which make the jobs they provide even more important.
“Fuel diversity helps protect customers from price volatility and potential shortages of any one fuel source. Unfortunately, new restrictions on coal expose our customers to these risks, while further hindering our ability to serve our customers in a reliable and cost-effective manner,” Heilbron added.
Alabama Power, a subsidiary of Atlanta-based Southern Company (NYSE:SO), provides electricity to more than 1.4 million customers across the state. Learn more at www.alabamapower.com.
Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning current and proposed environmental regulations and related estimated expenditures. Alabama Power Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Alabama Power Company; accordingly, there can be no assurance that such suggested results will be realized. In addition to the factors discussed in Alabama Power’s Annual Report on Form 10-K for the year ended December 31, 2013, and subsequent securities filings, the impact of recent and future federal and state regulatory changes, including legislative and regulatory initiatives regarding environmental laws including regulation of water, coal combustion residuals, and emissions of sulfur, nitrogen, carbon, soot, particulate matter, hazardous air pollutants, including mercury, and other substances, as well as changes in application of existing laws and regulations, could cause actual results to differ materially from management expectations as suggested by such forward-looking information. Alabama Power Company expressly disclaims any obligation to update any forward-looking statements.