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Prepare for retirement of Conn. coal plant, report says

January 24, 2014

By Matthew Bandyk, SNL Financial – CHARLOTTESVILLE, VA- “The only coal-fired plant in Connecticut faces a “bleak” future, according to a Jan. 23 economic analysis that argues that Public Service Enterprise Group Inc.‘s Bridgeport Harbor 3 plant will not be financially viable under any realistic scenario and that state policymakers should prepare for its retirement.

The time the plant spends producing power has “fallen off a cliff” since 2008, when gas prices and power prices fell dramatically, and there is little chance that for the foreseeable future Bridgeport Harbor 3 will make enough money to cover its operating expenses, according to the study’s author, David Schlissel of the Institute for Energy Economics and Financial Analysis, or IEEFA….

Under a series of “optimistic” assumptions, the IEEFA sees the plant’s earnings rebounding to $40 million in 2014 and ending up at $36 million by 2020. These assumptions include that New England will not solve its natural gas constraint issue, leaving power prices high in the winter, and that Bridgeport Harbor will operate at an average 20% annual capacity factor from 2014 to 2020.

But even in this optimistic scenario, “There is no reasonable prospect that PSEG Power will have anywhere near the pre-tax earnings from Bridgeport Harbor Unit 3 that it had through 2008,” the study said.”

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