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Coal, electric customers likely to suffer under new emissions rule

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By The Associated Press
Saturday, Sept. 21, 2013, 12:01 a.m.

NEW YORK — Tough new limits on the amount of heat-trapping emissions new power plants can emit will likely accelerate a shift away from coal-fired power and toward electricity generated with natural gas, wind and sunshine.

Power prices for homes, businesses and factories may eventually rise, and nuclear power could return to fashion.

The rule proposed by the Obama administration on Friday will have little effect on the mix of power sources and electricity prices anytime soon because it applies only to new power plants and is likely to be challenged in court. Even so, market forces are already reshaping power markets in the same way the rule will. A boom in natural gas production in this country has dramatically increased supplies, sent prices plummeting and prompted a shift away from coal.

The rule requires new coal plants to be built with extremely expensive equipment to reduce carbon dioxide emissions. That will make coal look prohibitively expensive to regulators and utilities planning for the future. By comparison, natural gas-fired plants, which emit half as much carbon dioxide as coal plants, along with wind turbines and solar panels, will look like a bargain.

Jason Bordoff, director of Columbia University's Center on Global Energy Policy, called the rule “consistent with already evolving market trends toward the use of natural gas instead of coal” and described it as “cost-effective.”

Nonetheless, it creates financial winners and losers. Here's how the landscape could change for companies and customers:


• Natural gas. Most new natural gas-fired power plants will stay within the rule's emissions limits without requiring new equipment. That means natural-gas fired plants — by far the cheapest power plant to build and operate — likely will remain the top choice for utilities.

• Renewable energy. Wind and solar developers, like NextEra Energy and FirstSolar, may see increased demand for large projects, especially if power prices rise.

• Nuclear power. Nuclear, like coal, has suffered from the low power prices as a result of cheap natural gas. Utilities have abandoned ambitious plans to build nuclear plants, and they've shut down aging plants that have become too expensive to run. If prices rise, nuclear operators such as Exelon and Entergy will benefit.

• Power generators. If electricity prices rise as coal use declines, companies that sell wholesale electric power, such NRG Energy and Calpine, may benefit.


• Coal miners. The coal industry is struggling because coal supplies piled up and prices dropped as natural gas gained favor. Production is expected to fall to a 20-year low this year, and 151 mines that employed 2,658 workers were idled in the first half of this year, according to SNL Energy.

While coal will continue to be an important fuel for the electricity generation for decades, it appears to be heading toward a long, slow decline.

• Electric customers. Natural gas prices generally dictate the price of all electricity in this country. If demand for natural gas rises faster than drillers supply it, the price will rise and drag power prices up too, possibly boosting electric bills for homes and businesses.

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