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Polar vortex encourages industry to push old coal plants

THE might of the recent polar vortex that unleashed its fury on the US may yet prove a breath of fresh air to the coal and nuclear industry.

Sadie Davidson
Polar vortex encourages industry to push old coal plants

Electricity prices are more than 10 times last year’s average due to masses of Arctic air rolling down from the North Pole, threatening to leave many a crippled city in complete blackout.

This has prompted energy companies to call for extensions to the lives of old coal-fired power stations and ageing nuclear reactors.

Despite protests by environmentalists and public health experts, coal is the cheapest and most plentiful fuel in the world. And it is proving globally resilient. In the US, rising natural gas prices are causing utilities to switch back to coal at the highest levels since 2011.

The recent cold spell exposed the vulnerability of the power sector as more coal plants are retired, said Fitch Ratings director of the utilities Roshan Bains.

Grid operators and regulators may try to change market incentives to keep older power plants online, while New England states may extend contracts and payments to nuclear operators to prevent them from closing, says investment bank UBS AG said in its February research note.

Now the coal industry is turning the polar vortex into its latest bargaining chip in a bid to pressure the Obama Administration into reducing EPA limits on carbon emissions.

Twice during the week of Feb 6, the northeast was swept by snowstorms that shut off power to 800,000 homes and businesses from Ohio to New York.

Duke Energy CEO Lynn Good said the extreme winter reinforced the advantages of traditional fuels.

She told Bloomberg:, “That’s what we really counted on during this period, as I look at the portfolio we operate, which is a combination of coal and gas, and nuclear and pump storage and hydro, we needed every bit of it”

Acting Federal Energy Regulatory Commission chairman Cheryl LaFleur said the agency would hold a meeting in Washington on April 1 to discuss the weather’s impact on gas and electric markets, and lessons to be learned from the recent cold spells.

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