PERU – After nearly a century of producing electricity, the Peru coal plant is powering down.
Officials have taken the first steps to permanently shutter the facility after the Peru Utilities Service Board voted in October to decommission it.
Roger Merriman, general manager of Peru Utilities, said the move came after the board previously decided it was too expensive to update the coal plant to comply with more stringent EPA rules regulating air emissions.
“We saw these rules coming down the road years ago and we were sure we weren’t going to be able to comply with them,” he said.
The plant, located at 335 E. Canal St., was the sole supplier of electricity to the city until the 1970s, when the utility also began to purchase power from Duke Energy, Merriman said.
He said a plant has existed at that site since 1911.
The city began purchasing power in 1983 from the Indiana Municipal Power Agency, which is its current supplier, but continued to produce its own electricity to sell to the IMPA.
The plant was most recently used to generate electricity that was sold on the market, with the profits going to the city’s utility.
Merriman said the facility stopped doing that three years ago after a sharp decline in energy prices, and hasn’t produced any electricity since then.
Peru workers have now started to shutter the building, which entails removing environmental hazards such as oil and chemicals. He said security cameras have already been installed around the facility.
The big question now is whether the utility board will decide to demolish the plant or “mothball” it, which would require the utility to shutter and secure the facility but still maintain the building.
According to a study commissioned by the utility, the estimated cost to demolish the building would be $4.8 million. The annual cost to mothball the plant is estimated at $140,000 a year.
Merriman said, however, that he anticipates the annual cost to mothball it would be significantly lower than the estimates provided by the study.
Stan Akers, chairman of the Peru Utility Service Board, said in his opinion it makes more sense to demolish the building rather than pay to maintain it.
“There’d be absolutely no return on it,” he said Tuesday. “I think the average, logical person would say it doesn’t make sense to put money into a vacant building.”
Akers said the board likely will put out bids to demolish the plant in the spring.
The closing of the Peru facility is part of a national trend of coal plants going off the grid as the EPA tightens environmental regulations on air pollution.
In 2002, 633 coal plants produced electricity in the U.S., according to a report issued this year by the Energy Information Agency. By 2013, 115 of those plants had closed, the study said.
Merriman said many of those plants were in towns and small cities like Peru, which can’t afford to upgrade to meet new regulations like the ones unveiled earlier this year by President Barack Obama in his Clean Power Plan.
The plan aims to cut pollution that leads to soot and smog by over 25 percent by 2030. According to the EPA, power plants are the largest source of carbon pollution in the U.S., accounting for roughly one-third of all domestic greenhouse gas emissions.
In Peru’s case, Merriman said, the coal plant was using technology from the 1940s and 1950s to produce electricity.
“Our units are so inefficient that there’s no way we could have complied with these regulations,” he said.
With the Peru plant closing, there’s a chance the move could lower electric rates for customers, Merriman said, since the value of the utility’s assets is used in part to determine rates.
If the value of the plant goes down, or disappears if it’s demolished, that should lower rates.
The utility has now commissioned the first rate study in 10 years to determine what customers should pay. Merriman said the utility won’t know if closing the power plant will affect rates until the study is complete.