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Western Pa.'s coal site 'monstrosities' re-envisioned

| Saturday, Aug. 20, 2016, 9:00 p.m.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.
Jasmine Goldband | Tribune-Review
The Elrama Power Plant along the Mon River that NRG/GenOn closed in 2012.

Two towering symbols of the electric grid's former reliance on coal power cast shadows over Union Township in Washington County.

NRG Energy's Elrama Power Plant and FirstEnergy Corp.'s Mitchell plant just a few miles upstream each burned coal for decades along the Monongahela River before closing three years ago as environmental regulations and competition from cheaper natural gas started squeezing out such older, coal-fired plants.

“Those structures are ... I'd say monstrosities,” said Larry Spahr, a township supervisor in Union, which borders Jefferson Hills in Allegheny County, 20 miles upstream from the point in Pittsburgh. “Given the modern world, if new manufacturing could be sourced there, that would be great.”

Elrama and Mitchell aren't the only shuttered sites sitting dormant across Pennsylvania, products of a wave of several hundred coal plant closings nationwide — and about a dozen in the state — over the past few years as electricity markets shifted and the coal industry collapsed. Experts expect more as operators continue to struggle with tepid demand and competition from cleaner sources of power.

Recognizing that trend, state officials have hatched a plan to encourage redevelopment of the sites with the goal of attracting the builders of manufacturing facilities and other commercial ventures. Many of the sites are in prime locations, with good existing infrastructure, and returning them to the tax rolls could benefit surrounding communities.

“We had a series of properties across the commonwealth that if they weren't being repowered with natural gas, they were potentially going to sit idled, in the hands of energy companies,” said Denise Brinley, special assistant to the secretary for strategic industry initiatives at the Department of Community and Economic Development.

Working with several power plant owners, the department has identified 10 former coal-fired power plant sites as prime candidates — including Elrama, Mitchell, the Cromby Generating Station that Exelon closed in Chester County four years ago and NRG's former plant at Titus Station in Berks County.

“The reason that we like them is because they're industrial, at their base,” Brinley said. “They have tremendous infrastructure assets to them — river, road, rail and (electrical) transmission. And they're of good size. This could make them very attractive to some industrial end-user.”

The department applied for a piece of $65 million in federal funding through the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) initiative, which will be disbursed by the Appalachian Regional Commission and the U.S. Economic Development Administration.

If DCED gets funding, it will use the money for specialized assessments of each site that examine costs of environmental remediation and demolition, the types of assets that remain, and what the best possible use for the site might be.

“We call these playbooks; what we'd like to do with the sites,” Brinley said. “It's designed to give developers something that gives them more confidence in estimating what the costs will be. That would hopefully leverage next steps, including maybe a power plant owner is comfortable with a simple transfer of a property at no cost, or for a dollar, or less than a million.

“It helps to start getting the property into a negotiable phase.”

Akron-based FirstEnergy, Princeton, N.J.-based NRG Energy and Chicago-based Exelon have agreed to partner with DCED on the initiative if funding comes through, Brinley said.

“We feel that our former plant sites are located in areas with a lot of potential,” said Stephanie Walton, a spokeswoman at FirstEnergy. Its shuttered sites include Mitchell in Washington County, Hatfield's Ferry in Greene County and Armstrong near Kittanning.

The company agreed to provide access to sites for the assessments and staff for assistance.

Walton declined to say what steps the company has taken to sell any of its closed sites.

“We are open to any proposals that are brought to us,” she said. “We certainly encourage parties to present any offers.”

A spokesman for NRG did not respond to questions.

Getting reliable answers to questions about costs and who pays for what in a transaction could make selling the sites much easier, said R.T. Walker, a vice president at Downtown commercial real estate company CBRE, who leads its brokerage energy facilities group.

“To get rid of the unknowns, and reduce buyers' and investors' issues with liabilities, those are the biggest hurdles,” he said.

Converting former coal plants into anything other than gas-fired power plants has historically been a tough task. In a 2014 report on the topic, the Delta Institute — a Chicago-based nonprofit focused on environmentally friendly development — found the average time from plant closure to sale or property transfer was 16.4 years. Redevelopment takes 27.3 years on average.

The report listed the large size of structures on the sites, high remediation costs and a lack of historical models for best practices as top challenges for redevelopment.

Brinley noted that closing and tearing down coal-fired plants was not a common practice until recently. Most of the plants that retired over the past five years were 50 to 60 years old, according to federal officials.

New and proposed environmental regulations on air emissions, coupled with high costs and intense competition form cheaper shale gas prompted hundreds of plant closures since 2012. Last year alone, nearly 5 percent of all coal-fired plants were retired, and more closures are expected in coming years, according to the Energy Information Administration.

The percentage of electricity generated by coal fell from more than 50 percent a decade ago to 33 percent last year.

DCED would like to get its initiative in place before more plants go dark, and as manufacturers looking to get close to the petrochemical plant that Royal Dutch Shell will build in Beaver County start examining potential sites here.

Department Secretary Dennis Davin this summer said the state lacks adequate sites for companies to build on if they want to link up with Shell's ethane cracker, which will convert liquids pulled from many Marcellus shale wells into the building blocks of plastics.

“There certainly is pressure on the southwest (Pennsylvania) region for various redevelopment opportunities and we want Pennsylvania to be properly positioned,” Brinley said.

In most cases, coal plants already have the rail service, river barge access, proximity to highways and power supply that builders of industrial or manufacturing plants would be looking for.

Former coal plants have been converted into mixed-use developments elsewhere. In Ohio, Thai company PTT Global Chemical is eyeing a former FirstEnergy plant for a potential ethane cracker.

DCED hopes having third-party site assessments and state support will make opening the plant sites to developers a faster and easier process.

“The fact that the state is at the table and willing to help with the transaction between buyer and seller is very important,” Brinley said. “We'll partner with our sister agencies where appropriate to make sure we're providing the level of assistance needed to address any challenges associated with the property.”

“The end goal is to get properties back on the tax rolls and to get jobs back into communities.”

That's exactly what Spahr wants to see with the two shuttered plants in Union.

“Any kind of manufacturing, any light commercial would be fine; anything that would create employment,” he said. “In the Mon Valley, the jobs would be welcome.”

David Conti is the assistant business editor at the Tribune-Review. Reach him at 412-388-5802 or dconti@tribweb.com.

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