The Decline Of U.S. Coal Power Looks A Lot Like Henderson, Kentucky

May 22, 2018

Henderson is a small city of about 30,000 people on the Ohio River. 

For most of the last 50 years, the city has run on coal power. And the coal is locally sourced: all of it comes from Western Kentucky coal fields from within a 30 miles radius. 
Henderson Mayor Steve Austin is giving a tour around downtown. He remembers growing up beside the plant. 

“I grew up within a few blocks of the power plant. Plus, we had a coal burning furnace in the apartment house that we lived in and when you’d go out to your car it would have coal dust all over it.” 
These days, the coal is burning a lot cleaner, but it’s not burning as often. In the last six months, Henderson began purchasing most its electricity on the open market, only turning on the plant generators when necessary. 

The city is kind of unique in that it owns its own power plant, called Station Two. Historically, it’s provided some of the cheapest electricity in the state. But that’s changing. 
“It’s difficult to compete in the open market with this old of a power plant.” 
The city pays the power company Big Rivers to operate Station Two. But earlier this month, Big Rivers cut its contract with the city, saying it’s no longer profitable for them to keep running the plant. 
See, Henderson historically has taken its cut of the power for the city and left Big Rivers to sell the rest on the open market. 
But right now, it costs about 33 times more to produce energy from Station Two than it does to buy it on the open market. 
Now, Henderson has to decide whether it wants to continue running the plant without Big Rivers, or just close it down all together. 
“So it’s not practical, it doesn’t look like it’s going to be practical for Big Rivers and it doesn’t look like it’s going to be practical for Henderson Municipal power and Light.” 
All across the country, older coal-fired power plants are retiring. 
Glenn McGrath with the U.S. Energy Information Administration says market forces and technology are re-shaping the country’s energy grid. 
“There are a lot of retirements all over, Midwest appears to be particularly hard hit,” 
McGrath stressed that no plant closes for the same reasons. But similar forces are pushing coal out of the energy market all across the country. 
First, older coal power plants, like Henderson’s, use outdated technology. The old plants just aren’t as efficient at converting heat into energy. 
Add onto that: the costs to keep up with changing environmental regulations. Then try and compete with alternatives from wind, solar and the glut of natural gas in the country. 
“There have been a lot of new natural gas plants built so they are new, they are efficient, they are operating on a cheap fuel so it makes it a really tough and competitive environment for coal and Henderson is facing that.” 
The decision of what comes next for the city of Henderson falls largely on one person: Chris Heimgartner, the utility manager for Henderson Municipal Power and Light. 
“What you’re seeing right now is a shakeout of the less efficient plants and they’re going offline and station 2 may be one of those.” 
For Henderson to keep operating the plant past 2023, it’s going to cost between $50 and $70 million. But even after all those renovations, Heimgartner still sees coal as a gamble. 
“If you’ve got a coal plant that you are building today that is fully compliant with today’s regulations you could have a requirement for carbon capture and sequestration that would make that whole thing uneconomic.” 
Based on his research, Heimgartner doesn’t see much of a future for coal power in the U.S. 
“I think coal as a part of our fuel mix is in long term decline and I don’t really see that changing.” 
Kentucky’s Public Service Commission is currently reviewing Big Rivers’ decision to terminate its contract. If they agree, the city has until next summer to come up with a plan. 
Heimgartner expects the city will likely buy energy on the open market or consider building a natural gas plant.