Vistra Explains Coffeen Decision, Next Steps

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Profitability was a determining factor in the decision to close Coffeen Power Station, an official from Vistra Energy said Thursday morning in a meeting with local officials a day after the Texas-based company announced it was closing four coal-fired power plants by the end of the year.

The company also pledged transition help to the 95 Coffeen employees who will lose their jobs.

"In the end, we felt Coffeen was uneconomic," Vistra Senior Director of Community Affairs Brad Watson said to a room filled with officials from the state, county, and cities of Hillsboro, Coffeen and Greenville.  "It was losing millions and millions, and it would have cost millions to keep operating."

Responding to pointed questions from Sen. Andy Manar, Watson said that the Multi-Pollutant Standard (MPS) rule approved by the Illinois Pollution Control Board in June was not only a benefit to the company, but also requested by them.

"I just want to make the statement that this rule change was sought by the company," Manar said.

Under previous MPS rules, emission caps were determined by percentage, but the new rule calls for tonnage caps on sulphur dioxide and nitrous oxides.

"Under the old standards, we were required to run some plants at a loss–at a deep loss," Watson said.

He also said that the company was at the table along with the Illinois EPA, the state attorney general's office, and environmental groups when the new MPS rules that also require 2,000 megawatts of coal-generated power to be retired.

"There were plant retirements that were introduced into the negotiations," Watson said.  "We accepted that.  If we got nothing done, 75 percent of our downstate fleet was at risk–as much as 4,000 megawatts."

The plants financial problems were "not because of the employees," Watson noted several times during the meeting.  Much of the difficulty stems from imbalances in the power market.  Coffeen must compete against power produced by subsidized sources like wind and nuclear, against power produced by less expensive natural gas plants, and against power plants from regulated states that can cover costs in other ways.  Emission controls at Coffeen also take a percentage of power produced by the plant to operate.

"It does have a lot of rigorous emissions controls," Watson said of the Coffeen plant, "but that doesn't mean it's profitable.  Coffeen still loses money."

To help transition those who will lose their jobs in the closure, Watson said Vistra has hired an out-placement agency who will work with each employee individually.  The company will begin "effects negotiations" for severance plans with unions representing organized labor at the plant, and offer severance packages to non-union staff.  Martha McDermott of the state Department of Commerce and Economic Opportunity and Mike Sherer of West Central Development Council also pledged help to impacted employees.

As part of the closure process, Vistra is filing the required notices with markets and regulators, and if it is determined that Coffeen and three other plants in the announced closure are not needed for reliability, the company expects to cease operations at all four sites sometime between mid-November and the end of the year.

Vistra will then begin a decommissioning process, in which usable parts from the plant will be taken to other sites, some will be scrapped, and the site will be secured.

"We would like to transition sites such as Coffeen into renewable energy," Watson said, discussing a plan to develop solar power there by 2022 and a power storage facility by 2024.  "It's an opportunity to re-invest in the site."

That plan would need some $450 million in tax credit or subsidies from the state and would employ "probably 10 or less" when operational.

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