Eco regulations force massive coal plant to shut down, sparking community uproar

EXCLUSIVE: A plan to prematurely cease operations at a coal-fired power plant in eastern Texas early next year has sparked angst among members of the local community who fear severe economic consequences.

In 2020, Southwestern Electric Power Company (SWEPCO), a subsidiary of the Ohio-based American Electric Power (AEP), announced it would close H.W. Pirkey Power Plant, a large 721-megawatt coal plant located in Hallsville, Texas, in March 2023. SWEPCO told FOX Business that it elected to shutter the plant "after an economic analysis weighing the cost of environmental compliance and needed maintenance."

The company — which operates 11 power plants, including Pirkey, and serves nearly 550,000 customers across Texas, Arkansas and Louisiana — also said it had ultimately factored customer costs into its decision.

"One of the factors considered was impact on customer rates for the cost of completing this work. Customers will benefit from this decision," Scott Blake, a spokesperson for AEP, told FOX Business in an email. "When the announcement was made, we immediately began working with the community to do everything possible to lessen the impacts of the plant’s closure."

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Among the many state and federal regulations coal-fired power plants are faced with is the Environmental Protection Agency’s (EPA) coal combustion residuals (CCR) rule, which is designed to protect the environment from excess coal ash contamination. The costs associated with complying with the CCR rule was a main driver leading to the Pirkey plant's planned shutdown.

In addition, two environmental groups, the Environmental Integrity Project and Sierra Club, filed a lawsuit against the EPA last month, accusing the agency of failing to enforce federal emissions standards at the Pirkey Power Plant and seven other Texas facilities.

However, the decision to close the Hallsville plant has sent reverberations through the tiny town, which relies upon the plant for direct and indirect economic support as well as reliable energy, according to several members of the community.

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"That's going to devastate our community," Doug Coleman, a retired superintendent of Hallsville Schools, told FOX Business. "There's a number of things it's going to affect, of course, the people not only in Hallsville but all the surrounding areas. Marshall, Kilgore, Carthage, you know, small communities with blue-collar workers, and it's going to devastate them."

"The other thing is, I'm on a fixed income. I'm going to have a tough time paying my electricity bill and, with the taxes going up because of the taxes they draw from the power plant, that's another downside of it," Coleman said. "I just can't fathom that they'd even think about closing it, to tell you the truth."

Overall, the plant shutdown is projected to lead to a loss of $22 million in sales and economic output in the region, according to local outlet the Marshall News Messenger. It will also spark a $2 million to 3 million loss for local school districts that rely on tax revenue from the plant for funding. The lost revenue could lead to dozens of job losses at local schools.

"It's been a mainstay in our community for years and years and years," said Brad Burris, the president of the nearby Marshall Independent School District and a local real estate agent.

"I knew that there were going to be lost jobs from the school board side of it," he added. "We're going to lose probably about $2 million a year in funding, tax funding, from that plant shutting down. So, that's going to affect us in a great way, as well as other school districts."

Monte Pearson, an engineer from nearby Longview, added that he was worried both about the reliability of replacement power generation and the job losses associated with closing the plant down. AEP said it was planning to replace the power generated at the plant with a "mix of resources, which include renewable resources, natural gas and coal" but didn't specify where the generation would come from.

"That's where our power comes from, and I worry about the reliability of the replacement power," Pearson told FOX Business. "I've got a bunch of friends around here that work out there. Now, I'm worried about their jobs."

While SWEPCO promised to provide severance, educational and retraining resources and other potential job opportunities to the hundreds of workers at the plant, the closure will directly impact workers at the nearby Sabine Mine, which provides the plant with its coal resources. The mine's sole customer is the Pirkey Power Plant and is slated to close due to the shutdown.

Several workers at the mine, who asked to remain anonymous fearing repercussions, told FOX Business that the decision to close the power plant came as a shock.

"We have a little room that we gather in and have our safety meetings and stuff where they called a meeting and actually let everybody just go home that day because we were overwhelmed with stress, just so many emotions," one miner told FOX Business.

"I told my wife that I don't know what we're going to do," he continued. "We just had a baby, and she was going to school. It was a lot. You know, it's the same impact on others, I'm not the only one. There's 200 to 300 employees at the mine."

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The worker also said he was concerned as an energy customer who may have to pay higher bills due to the plant shutdown.

"I was shocked that this plant would be closing because over the years we have been a very efficient plant, low-cost, and we put in the features that the EPA asked for to keep down emissions. We're doing everything on our end," a second coal worker told FOX Business.

"It was just a whole change of life for me as far as my retirement because I'm 54 years old now," he said. "So, I'm not old enough for retirement, but I'm too old to really get out and try to find another job."

A third worker said any plan to replace Pirkey with renewable energy would lead to higher costs for consumers and lower reliability of the grid. He also lamented the widespread impact the closure would have on locals.

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"You're going to spend an astronomical amount of money to make that happen," he said "All that money is going to transition over to the ratepayers."

"It impacts me and then not just me. It's my family and friends, everybody in the surrounding area and even the vendors that we deal with each and every day," he added. "Coal mining supports a big group in this area."

And a fourth worker said he had originally planned to work at the mine and provide coal for Pirkey until he retired. Now, he is forced to scramble to find another job.

"I came out here young," the worker told FOX Business. "And this is it, this is my forever job."

The mine's operator — the Sabine Mining Company, a subsidiary of the North American Coal Corporation (NACCO) — said it supported keeping the plant open, adding that the closure would have an adverse effect.

"We believe the Pirkey Power Plant is a reliable and resilient asset, and the continued long-term operation of the facility is in the best interest of our employees, the local community, region, and state," a spokesperson for NACCO told FOX Business. 

"It provides thousands of Texans and other citizens in the SPP region with reliable and affordable electricity," the statement continued. "We believe the U.S. electrical grid is becoming less dependable with the switch to intermittent energy sources, and keeping the Pirkey Power Plant online will help with grid stability and reliability."

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The Pirkey shutdown comes as the federal government, state governments and environmental groups continue to push a rapid green transition away from fossil fuel power like coal to clean energy sources like wind and solar. Proponents of the transition have argued that such an aggressive switch is vital to save the planet from climate change.

President Joe Biden, whose administration has supported the green transition, said earlier this month that he would work to shutter coal plants "all across America" and replace them with wind and solar power.

In August, the president signed the Inflation Reduction Act, a massive climate package that includes various incentives for renewable energy development.

"When you have the government coming in and putting their thumb on the scale to say, 'We're going to pay you a whole lot of money to build wind and solar and we're going to regulate everything else out of existence,' and then give a bunch of money to wind and solar, that's what the utilities are, of course, going to try and build," Brent Bennett, an energy expert at the Texas Public Policy Foundation, told FOX Business in an interview.

AEP, the owner of the Pirkey Power Plant, has committed to achieving net-zero emissions by 2045 and an 80% reduction relative to 2005 levels by 2030, plans which Bennett said could have factored into the decision to shut the facility.

And the company's CEO, Nick Akins, visited the White House earlier this year, publicly asking for more tax incentives to build green energy projects.

"Partners in the federal government can enable … this industry to move much more quickly than we would have otherwise, particularly with the tax provisions, ITCs — investment tax credits — and so forth," Akins said during the White House roundtable with Biden in February 2022. 

"Those have really produced benefits for consumers, because those costs, those benefits actually flow through to our consumers and contribute to the economy," he continued. "So, it’s a great opportunity for us to make that transition."

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Akins said building renewable power sources was an opportunity for the company to help "move toward that clean energy future." He also said his company's plans would help create jobs nationwide.