Non-fuel operation and maintenance costs per megawatt hour for coal power plants increased significantly in 2012 compared to 2011 and 2013 in most regions. The spikes in 2012 appear partly due to fixed costs being spread across fewer megawatt hours of generation as low natural gas prices led to more combined-cycle gas plant use. For plants scheduled to retire, the 2012 cost increases were even higher, suggesting maintenance spending on soon-to-retire plants. While costs decreased in 2013 in some regions, they remained substantially above 2010 levels in certain regions like SERC, possibly due to those regions' continued reliance on plants slated to close.

1. Copyright © 2014 ScottMadden, Inc. All rights reserved. Report _2014-02_v1Copyright © 2014 ScottMadden, Inc. All rights reserved. Report _2014-02_v1
Coal’s Twilight Gets Expensive
July 2014

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Non-Fuel O&M per MWh Cost Trend for Coal Generators
With all the discussion about the death of “king coal,” retirements, and fuel switching, we wondered:
￭ What is the overall trend for non-fuel costs for coal plants?
￭ Are there regional differences in non-fuel O&M costs?
￭ Do units slated for retirement have a different non-fuel O&M trend than those planned to continue running?
1
Introduction

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2012 Was an Unusual Year
2
Cost Trends in the Largest Six NERC Regions
Non-fuel costs spiked in all regions in 2012 compared to
2011 and 2013, and some spiked much more than others…
 Low gas prices (more combined-cycle dispatch and
subsequently less dispatching of coal units) explains some of
the difference but not the dramatic cost increases in regions
with significant coal capacity (RFC and SERC)
Notes: Includes all coal-fired steam turbine generating units except pet coke and waste coal-fired units; co-generating units less than 25
MWs which are not subject to EPA CEMS reporting were excluded
Sources: Ventyx Energy Velocity Suite; ScottMadden analysis
51% Increase
111% Increase
 2012 cost spikes appear driven partly by fixed costs
spread over fewer MWhs
When we look at non-fuel O&M for units not scheduled for
retirement, the 2012 spike pattern remains but is much
lower than the total fleet, suggesting that a lot of O&M was
spent in 2012 on units slated for retirement
Together, SERC and RFC
represent 62% of all coal-fired
capacity in North America

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Costs Decreased in 2013, Some Less Than Others
3
Cost Trends in the Largest Six NERC Regions
While costs for MRO and SERC were lower in 2013 than
2012, they are up substantially since 2010, unlike the other
four regions we examined. Could installation of advanced
air quality control systems be responsible?
 Installed NOx equipment has been stable since 2010 for all
regions, so it is unlikely this is the cost driver
 Installed SO2 equipment is up substantially in SERC and
RFC but not MRO
If advanced air quality control controls are not causing the
cost increases in MRO and SERC, then a continued reliance
on units slated for harvest is a likely explanation
Notes: Includes all coal-fired steam turbine generating units except pet coke and waste coal-fired units; co-generating units less than 25
MWs which are not subject to EPA CEMS reporting were excluded
Sources: Ventyx Energy Velocity Suite; ScottMadden analysis
32% 38%
NOx Control Equipment Installed by Capacity SO2 Control Equipment Installed by Capacity