SoCal Edison Bails Out of Coal Plant

Ngoc Nguyen
New America Media
07April 2010
Even as Pres. Obama is touting coal as part of a clean energy future, one of the largest utilities in California is trying to distance itself from the fossil fuel.

Southern California Edison (SCE), a subsidiary of Edison International, intends to divest its 48 percent share of Four Corners Power Plant by the end of 2016. Located west of Farmington, New Mexico, on the Navajo Nation reservation, the power plant represents SCE’s last remaining stake in a coal-fired power plant.

In a March 1 financial disclosure to federal regulators, the company indicated that California law prohibits it from making long-term investments in generators that emit high levels of greenhouse gases, which include most coal power plants.

“SCE thus does not expect to enter into any long-term ownership arrangements for its share of Four Corners Units 4 and 5 after the 2016 expiration of the current participant agreements due to the investment constraints of SB 1368,” the company said in the report.

“California law prohibits certain future investments in plants such as Four Corners,” said SCE spokesperson Gil Alexander. “We do not intend to be a partner at the Four Corners plant beyond the current contract.”

Southern California Edison isn’t the only one. Los Angeles Department of Water and Power, which gets 44 percent of its electricity from coal, announced in October 2009 it would eliminate the purchase of coal power in the next 10 years. The trend shows utilities are increasingly seeing coal as a bad business decision.

“It’s a sign that SCE is conscious of the cost of keeping coal in its portfolio,” said John White, executive director of the Center for Energy Efficiency and Renewable Technology, based in Sacramento. “There is a myth that coal is cheap, compared to other sources of electricity, but the problem is it doesn’t count a lot of the costs that coal imposes on communities. Now, the bill is coming due.”

Four Corners is a 2,040-megawatt power plant made up of five units. Arizona Public Service is the sole owner of units one, two and three. Southern California Edison co-owns units four and five, which generate 1,500 megawatts, with Arizona Public Service and three other utilities.

The need to install pollution controls to comply with federal rules, the problem of coal ash, mine safety, and the looming threat of climate change are weighing heavily on bottom lines and clouding the future of coal power.

“SCE has informed the plant that it does plan to divest of its ownership share no later than 2016,” said Arizona Public Service spokesperson Damon Gross. “As far as an owner stepping in, it’s too early to say because there’s a lot of moving parts.”

That includes, he said, increasing efforts to regulate greenhouse gas emissions by the federal government and states, and a host of environmental regulations pertaining to air, water and hazardous waste.

The federal Environmental Protection Agency has proposed air pollution controls for Four Corners power plant costing $900 million.

In its 10K financial disclosure to the Security and Exchange Commission, SCE said California law may prohibit it from making costly capital investments: “SB 1368 may prohibit SCE from making emission control expenditures at Four Corners.”

Gross said SCE’s decision to divest of its ownership share and the proposed EPA pollution retrofits are posing “serious challenges” for the power plant. He said Four Corners plays a significant role in the community.

Arizona Public Service met with members of the Navajo Nation government last week to discuss the future of the Four Corners Power Plant. Both the Navajo coal mine and the power plant employ 1,050 workers, of which about 75 percent are Native Americans.

The transition from traditional sources of energy to renewable sources will shed jobs, but it also has the potential to create the “next generation of jobs,” says Monique Lopez, campaign associate with the Coalition for Clean Air, a statewide advocacy and policy group.

There’s also a perception that the switch to renewables will lead to higher energy costs, but Lopez says in the long run, coal power will cost more.

“Moving away from those sources and moving to renewable energy will not only benefit those communities, but benefit those communities receiving that energy in the long run, because of pending carbon regulations that are coming down the pipelines which will make those types of sources more expensive for consumers.”

Consumers will also see savings on their utility bills with stepped up efforts to boost energy efficiency, and says that’s the direction utilities need to take.

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Reprinted as an historical reference document under the Fair Use doctrine of international copyright law.