Public Service Enterprise Group Inc. announced Wednesday that it would shut down its remaining two coal-fired power plants in New Jersey next year, the latest casualties as coal loses market share to inexpensive natural gas.
PSEG said it will retire its Mercer Generation Station near Trenton and the Hudson facility in Jersey City on June 1. The plants are used infrequently, and neither cleared the last two capacity auctions held by PJM Interconnection, the regional grid operator.
"The sustained low prices of natural gas have put economic pressure on these plants for some time," Bill Levis, president and chief operating officer of PSEG Power, said in a statement. "In that context, we could not justify the significant investment required to upgrade these plants to meet the new reliability standards."
Coal, once the workhorse fuel that powered America's industrial growth, has been in decline in recent decades as environmental regulations became more strict and renewable energy and natural gas emerged as cleaner options. Coal now supplies about 2 percent of the electricity generated in New Jersey, down from more than 21 percent in 1997.
Mercer was opened in 1960 and has a capacity of 632 megawatts. Hudson, which started in 1968, can generate as much as 620 MW. PSEG said it was committed to treating the 200 employees "fairly" during the plant-retirement process.
"We will work with our union and PSEG leadership to ensure that the plants continue to operate safely through their retirement dates and to place as many employees as possible within PSEG's family of companies," Levis said.
PSEG is also evaluating all options for reusing the sites.
The retirements leave few remaining coal-fired plants in New Jersey.
The Logan Generating Plant, on the Delaware near Swedesboro, supplies steam for Ferro Corp. and electricity for Atlantic City Electric customers. Owned by subsidiaries of Ares EIF, the 225-MW plant was built in 1994 and is equipped with more modern emission controls.
In addition, Chambers Cogeneration LP operates a 261-MW plant at the DuPont Chambers Works site in Carneys Point, Salem County.
Jeff Tittel, director of the New Jersey Sierra Club, lauded PSEG for retiring its plants.
"The closing of these two plants is a turning point in our battle against dirty coal and for clean air in the entire region," Tittel said. "With Mercer and Hudson closing, there will not be any coal plants from Trenton all the way to Maine and Jersey City to Buffalo."
PSEG expects to book onetime charges related to the closures of $40 million to $70 million for the Hudson plant and $35 million to $77 million for the Mercer unit. The shutdowns also will result in noncash charges to earnings of $560 million to $580 million this year and $940 million to $960 million in 2017.
At the close of trading Wednesday, shares in PSEG were up 9 cents, or 0.2 percent, to $40.77.
PSEG and other merchant power generators have been expanding their capacity to generate electricity from natural gas as long-term supplies of shale gas have come into play. Much of the gas is sourced from the Marcellus Shale formation in Pennsylvania, West Virginia, and Ohio.