New Gas-Fired Electric Power Plant in Ohio

Another story about how electric generating plants are switching from coal to natural gas. This one comes from Ohio, where Appalachian Power brought a newly completed gas-fired plant in February near Dresden. Why switch from coal to gas? It’s all in the economics. The cost of coal has skyrocketed from $43.75 per ton in 2007 to $63.78 in 2011, an increase of 46 percent. At the same time, natural gas has gone from over $14 per million Btus to around $2.70 today. Need we say more?

But at what price is it more economical to use coal rather than natural gas? Thanks to Appalachian Power, we now know.

Appalachian Power’s natural gas-fired power plant near Dresden, Ohio…began producing electricity in February. Running at full capacity, the 580-megawatt plant can produce enough power to supply 145,000 homes.

Dominion Resources began building the plant but gave up. Appalachian Power bought it for the bargain-basement price of $85 million and finished construction. [Charles Patton, president & COO of Appalachian Power] figures Appalachian was able to bring Dresden online for $300 million less than it would have cost to build a similar plant from scratch.

Appalachian Power executives originally thought Dresden would operate at about 20 percent of capacity. "It’s more around the 60 percent to 70 percent range so it’s really acting as a base load unit," Patton said.

At first the company thought Dresden would save Appalachian’s 500,000 West Virginia ratepayers about $5 million a year. The company hasn’t recalculated the savings yet but it may well be more.*

The concern is, of course, is if natural prices rise again, the plant may become uneconomical compared with coal. But according to Charles Patton, they can operate the plant at a profit all the way up to a price of $4.50 per million Btus for natural gas. And current price forecasts don’t hit that level for at least several years, maybe longer.

*The Charleston (WV) Gazette (May 26, 2012) – George Hohmann: Outlook for gas is good