The temperatures are dropping in Texas—and so is our ability to rely on wind and solar. A power plant closure in East Texas could make things worse.
Fresh off a grid-straining summer, the Electric Reliability Council of Texas (ERCOT) is preparing for potential energy emergencies this winter with an expensive plan to secure additional power generation. Significant growth in electricity demand since last winter’s weather caused outages have ERCOT scrambling to reopen or recommission dispatchable power generators that otherwise would not be in operation, aiming for 3,000 MW of extra capacity. ERCOT is incentivizing and prioritizing dispatchable generation for this winter, a time when we cannot count on wind and solar to pull their weight.
There are growing resource adequacy concerns across the southwestern U.S. So why does a reliable coal plant, capable of operating for at least 12 more years, shut down early?
Southwestern Electric Power Company (SWEPCO) made the decision to close the Pirkey Power Plant in November 2020. The Pirkey Power Plant and associated Sabine Mine Company in Hallsville, Texas employed 254 Texans, contributed $2.3 million to Marshall and Hallsville public schools, and—most crucial, when considering winter’s approach—provided 721 MW of reliable, dispatchable generation. That is enough to power 145,000 Texas homes during the coming peak winter demand hours that have ERCOT concerned and searching for new generation.
SWEPCO claims its decision to retire the Pirkey facility is the result of an unsubstantiated economic analysis the company performed in November 2020. The Public Utility Commission of Texas (PUC) recognized the analysis was lacking sufficient evidence to support the closure and determined an updated analysis would support keeping the plant open. Winter Storm Uri, Winter Storm Elliot, as well as market and regulatory changes, have since made this analysis even more erroneous. PUC Commissioner Will McAdams noted that the continued reliance on the 2020 analysis demonstrated SWEPCO knew what outcome it wanted and it adjusted the analysis parameters to reach it.
In a Texas Senate State Affairs Committee hearing held last December in Marshall, Texas—just a few miles from Pirkey—committee members questioned Net-Zero commitments made by BlackRock and State Street, two of the largest shareholders of American Electric Power (AEP). SWEPCO is a subsidiary of AEP, and these commitments require the utilities they invest in to “manage down” their coal assets, closing them and removing that much needed power from the grid, rather than selling them to new operators. Specifically referring to Pirkey, Texas state Sen. Paul Bettencourt noted, “…to shut the plant down decades ahead of its economic life … [is] not good for this local area, it’s not good for the Texas grid, it’s not good for economic reality …”.
And it’s not good for SWEPCO either. It sought to replace the power generated by the Pirkey facility with more wind and solar, soaking up federal subsidies and excess profits in the process. The PUC denied its plan, threatening SWEPCO with significant financial penalties. Still, SWEPCO continued with the closure of Pirkey. Why would they incur steep costs to retire a coal plant with 12 years of useful life remaining?
A big driver for this decision can be summarized in three words: Net-Zero commitment. AEP has made a public commitment “to achieve an 80% reduction [in carbon emissions] by 2030 and Net-Zero emissions by 2050.” AEP’s sustainability report notes that their “stakeholders,” including investors, are driving this commitment. It also notes that the company is tying executive compensation to reducing carbon emissions. This Net-Zero agenda has been noticed by the PUC and the legislature.
These coercive Net-Zero mandates are used to drive the widespread agenda of renewables. As Texas state Sen. Lois Kolkhorst stated in that December hearing, “we lead the nation in renewables, even to the detriment of our citizens, as we saw in Uri.” The increasing politicization of investing decisions since the 2020 analysis has had real negative impacts and is also of major influence in these decisions. Environmental, Social, and Governance (ESG) investments made by the world’s largest investors, Blackrock, and State Street are directly altering our energy sources.
The PUC’s inability to prevent the closure of the Pirkey power plant should be a wakeup call to state utility regulators and legislators across the country. The Net-Zero movement has corrupted our nation’s electric utilities, and state legislatures and utility commissions are now the last line of defense preventing the collapse of our electric grids.
They need to stand up for their citizens and take a firm stance against the Net-Zero insanity.