Exelon closing two Pa. fossil-fuel plants

In the latest sign of a fundamental market shift toward cleaner fuels, Exelon Corp. announced yesterday that it would shut down two aging fossil-fuel power plants in Phoenixville and Eddystone in 2011, eliminating 280 jobs.

Exelon said that it would completely close the Cromby Generating Station along the Schuylkill in Phoenixville and that it would retire two coal-fired generators at the Eddystone Generating Station on the Delaware River.

The company said the decision to shut the Eisenhower-era power plants was based on economics - the high-maintenance units are costly to operate in deregulated electricity markets, where wholesale prices are depressed.

The decision also reflects a vision of the limited future of fossil fuels, especially coal, whose emissions of greenhouse gases are expected to be penalized under pending climate-control legislation.

"While these units are currently compliant with environmental regulations, we can see the increasing likelihood of environmental restrictions . . . that would require significant capital expenditures," Christopher M. Crane, Exelon's president, told analysts in a conference call.

The targeted units have 933 megawatts of capacity. Exelon contends that there is sufficient generation capacity in the region to meet demand, and with new natural gas supplies coming into the market, it is supplanting coal as the preferred fossil fuel. Exelon also has plans to increase the output of its Limerick and Peach Bottom nuclear reactors in the next eight years.

Exelon, based in Chicago, said it would record pretax charges totaling $258 million related to the shutdowns. Crane said the move would create up to $200 million of value for Exelon shareholders.

"While any job losses are difficult, the decision is responsive to the current and projected market conditions," he said.

The announcement came a day after Progress Energy Inc. said it would close 11 coal-burning power plants in North Carolina that require expensive emission-control systems. And Duke Energy Corp. has announced plans to shut down 18 coal plants by 2020.

About 220 jobs would be lost at Cromby and Eddystone, and an additional 60 support positions would be eliminated at the Kennett Square headquarters of Exelon Power, the company's nonnuclear generating subsidiary. Exelon said it was exploring ways to reduce layoffs by shifting workers to other jobs.

About 50 to 60 employees would remain at the Eddystone plant near Chester, where Exelon will maintain six units fueled by natural gas or oil.

The company gave advanced warning of its plans to serve notice on the regional grid operator, PJM Interconnection Inc. PJM has 30 days to decide if closing the plants would impair the reliability of the transmission system.

In their day, Cromby and Eddystone were workhorses. But the plants, which came under Exelon's ownership after Peco Energy Co. merged with Chicago utility Commonwealth Edison Co. in 2000, had played an increasingly limited role.

The Cromby units, a 144-megawatt coal-fired unit and a 201-megawatt generator fired by oil or natural gas, were placed in service in 1954 and 1955. Exelon said the units would be dismantled and sold for scrap. It has no plans to sell the property.

Eddystone Units 1 and 2, which generate 588 megawatts from coal generators, were put into service in 1960.

Crane said Exelon explored selling the plants, but found no takers.

While the loss of jobs was regrettable, Joseph Otis Minott, executive director of the Clean Air Council, said air quality would improve.

"In a region that doesn't meet the standards for particulates and ozone, it's going to have a positive effect," he said. "And it's going to have a positive effect on climate change."

But local officials expressed dismay.

"If Exelon believes this move will save money, then I hope such savings are reflected in ratepayers' monthly utility bills," State Sen. Andrew Dinniman, (D., West Chester), whose district includes Cromby, said in a statement.

Exelon shares closed at $49.96 on the New York Stock Exchange, up 94 cents, or 1.92 percent.