Coal plant operators would be wise to work with local communities when planning to wind up operations. A report issued last week by governmental actors offers guidance to local communities affected by any large power plant shutdown. The report, titled When People and Money Leave (and the Plant Stays), has much to say about the approach to be taken when proposing to close a power plant and how to address what comes after. Real benefits are available to a plant that works with the community. At a recent conference, two Colorado utilities involved in closures emphasized the positive results that working with their local communities achieved.
According to the U.S. Energy Information Agency, between now and the end of 2020, over 10 gigawatts of coal-fired generation in the United States will retire. With this much transition ahead, it is important for owners and operators of coal-fired power plants to plan to address the concerns of the host communities. This will require obtaining an understanding of the concerns and formulating a clear process through which they will be addressed. Owners and operators can have an important role in managing the negative effects of plant shutdowns.
When People and Money Leave identified some of the potential impacts on local communities. By way of example, the 2014 closing of the former Mt. Tom Power Station and last week’s ground breaking on a solar farm on the site illustrate those impacts:
- The loss of base load electric power. With the redevelopment at Mt. Tom, the plan is to install six megawatts of photovoltaic solar cells. Unfortunately, that replaces only a fraction of the original 136 megawatts Mt. Tom once provided to the power grid, and the remainder will have to come from someplace else.
- The loss of property taxes. Before closing, Mt. Tom paid more than $1 million in property taxes annually to the city of Holyoke, Massachusetts. A solar farm does not pay nearly as much; the city is looking at payments in lieu of tax of approximately $30,000 annually.
- The loss of locally earned wages and benefits and downstream economic impacts. The loss to the community from the closing of Mt. Tom is estimated at approximately $3.9 million per year, including the loss of 30 jobs.
- Loss of charitable contributions. Local community members impacted by the plant’s closing are most in need of the services of local charities, but the charities themselves will lose a major source of contributions, based on dollars donated by both the plant and the plant’s wage-earning employees, and the employees’ contributions of time.
The decision to close a plant is generally made for an economic reason, whether that be the inability of coal plants to compete in the market with lower-cost natural gas plants or the high cost of installing pollution control equipment. Consequently, the local community will likely have little impact on the decision to close.
The community, however, is very likely to substantially influence the long-term environmental remedies required and the future development and use of the site. If the community follows the recommendations in When People and Money Leave, including participating with “early, ongoing and neutral engagement” in state regulatory processes, and “build[ing] its knowledge base about the fiscal and socioeconomic role” of the plant and what the employer “intends to do if and when it ceases operation,” the community will be better positioned to plan for, and manage the impacts of, the shutdown. Operators can work with local communities to foster such an approach.
Community engagement, in fact, works both ways; it isn’t enough for the plant to be a reliable contributor to the mayor’s favorite charity. Community leaders should be invited to visit the plant, to meet with the crew chief as well as the public relations director, and to learn firsthand about current economic and environmental challenges. The plant cannot, and should not attempt to, fully ameliorate the lack of expertise and guidance available to a community confronted with a plant shutdown. The plant owner and operator can, however, encourage the community to hire “experts to make sense of information provided by the plant, public agencies, and advocacy organizations.”
Local communities, when faced with the impacts of a plant closure, also need to understand that the plant site should not be viewed as the sole source for solving all issues associated with a plant closure. When People and Money Leave counsels communities to avoid the “tendency and temptation to look for a single big solution to replace what is lost [because] that can stymie progress to be had through a series of smaller solutions.” Rather, the site needs to fit into a larger picture of potential solutions. For example, the Mt. Tom solar development may (and hopefully will) be one part of a larger set of solutions. Plant owners and operators should contribute to this process of finding solutions, since the targeted redevelopment of a plant site will determine the owner’s remedial obligations.
At the end of the day, a company closing a coal plant and redeveloping the site has to meet two requirements: comply with the law and realize value in the site. The local community in most cases is going to be an important player in achieving those goals.