The Coleto Creek Power Plant, which generates millions of dollars in tax revenues annually for Goliad County, will shut down by 2027.
The Fannin coal plant, which was built in 1980, is closing due to a combination of federal environmental regulations and competition in the Texas energy market, said Brad Watson, director of community affairs for Vistra, the parent company of the plant’s owner-operator.
In a memo sent to Goliad County officials this week, Watson said it would be prohibitively expensive for the plant to comply with two recently finalized rules enacted by the U.S. Environmental Protection Agency. One of these regulates the disposal of coal ash and the other limits the level of toxic metals in wastewater discharged from power plants.
“Ultimately, compliance with these EPA rules would require investment in new equipment, costing tens of millions of dollars,” the memo said. “This investment cannot be justified based on the underlying economics of the plant and the uncertainty of more stringent regulations under a new presidential administration.”
The plant, which employs 62 people, paid an estimated $3.2 million in local taxes in 2017, according to previous Advocate reporting.
Goliad County Judge Mike Bennett said the plant’s impending closure reinforces the need for officials to seek additional sources of tax revenue.
“This does not come as a surprise,” Bennett said Tuesday. “We all knew that the power plant was going to shut down at some point. We’re going to have further discussions with them about trying to bring other industry onto that piece of property.”
In addition to the costs imposed by federal regulations, Watson said market pressures contributed to Vistra’s decision to close the plant. The Coleto Creek plant is the smallest of the three coal plants the company’s subsidiary, Luminant, operates in Texas, according to the memo.
The plant is designed to be a baseload plant, which means it provides enough power to meet energy demands at any time of day, but it has been operating at just 38% capacity in the first nine months of 2020, which is unusually low, Watson said.
The Coleto Creek Power Plant’s closure is part of a broader trend away from coal in the energy industry as a result of environmental regulations and competition from natural gas and renewables. Luminant closed three Texas coal plants in 2018, and in September, Vistra announced plans to shut down all seven of its coal plants in Illinois and Ohio.
Even after the plant stops generating power, it will go through a shutdown process, Bennett said, so it will be some years before all of the jobs at the plant disappear. Still, he said, a large hole in the county’s budget is inevitable, and officials will have to find a way to make it up.
“We’re going to work as hard as we can,” Bennett said. “The last thing we want to do is raise taxes.”