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NRG, Tenaska Dumping Coal for Natural Gas

The news preceded President Obama's call last week for more action to address climate change, but executives at NRG Energy Inc. and Tenaska Inc. may have been reading between the lines after announcing over the past two weeks that because of abundant U.S. natural gas, coal is going to play a much smaller role in their generating schemes going forward.

A 60-year-old coal generator near Pittsburgh that was to be shuttered in 2015, as well as a coal burner in Ohio, are being retrofitted to burn natural gas, NRG officials announced late Monday. The 330 MW New Castle coal burner near Pittsburgh now is in the process of being re-engineered and redesigned to extend its operation beyond a planned April 2015 closing date, set last year by previous owner GenOn Energy Inc. The switch to natural gas may be completed by May 2016, said spokesman Dave Gaier.

The decision to retrofit instead of close the power plant should create up to 100 temporary construction jobs and save about 40 full-time positions, Gaier said.

New Castle was one of eight coal-fired plants in Pennsylvania, Ohio and New Jersey that were to be closed by GenOn before NRG bought the company last year.

"The New Castle plant shutdown was announced because it would have required a substantial investment in environmental controls to continue to operate as a coal-burning facility," Gaier said. However, NRG's management team "decided it could be operated economically on natural gas. We won't have to install the extremely expensive controls that would have been required to continue operating on coal."

NRG also plans to burn gas instead of coal at the 776 MW Avon Lake, OH, plant. The facility's makeover is being done at the same time as the New Castle redesign. NRG would run gas pipelines to the facilities, but but they would retain their ability to burn coal, Gaier said.

NRG merged with GenOn in December, creating the largest commercial power generator in the United States, with 47,000 MW of capacity. GenOn already had planned to shut 1,573 MW of coal-fired power within its nine-plant Pennsylvania portfolio rather than retrofit them. However, even if eight of the plants were to close, the Pennsylvania Electric Power Generation Association is forecasting that the state's generation could total 14,000 MW-plus over the next five years, with more than 11,700 MW from natural gas-fired facilities.

Meanwhile, independent power producer Tenaska late last week dropped its $3.5 billion proposal to build the coal-fired Taylorville Energy Center in central Illinois, because it is "no longer viable," said management. Instead, the Nebraska firm plans to focus on gas-fired and renewable facility opportunities elsewhere. The project was dropped partly because Illinois lawmakers could not agree to a 30-year contract to purchase power from the plant, with the costs passed on to utility customers and competitive power suppliers.

The Taylorville facility, in the works for five years, was designed to be a 602 MW "clean coal" project with carbon capture and storage, that would have converted Illinois coal to synthetic gas to create electricity. Emissions were to be captured and stored underground. The project was to have created 150 permanent jobs and 2,500 temporary construction jobs.

"We take a conservative approach to development, working to ensure projects will have a long-term market for their power before we begin construction," said Tenaska's Dave Fiorelli, president of development. The "current market is in need of natural gas-fueled and renewable electric generating facilities."

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