Despite regulatory impact, US coal industry isn't dead: DTE

Fort Lauderdale, Florida (Platts)--8Mar2013/1244 pm EST/1744 GMT

Though regulations are likely to shut older coal-fired plants in coming years, coal-fired capacity is likely to dip a scant 8% by 2020, said Stephen Braverman, vice president, coal services, at DTE Coal Services.

"No matter what, the US is still going to have a viable domestic coal industry," Braverman said Friday at the Platts Coal Properties & Investment conference in Fort Lauderdale, Florida.

Braverman said the end result of the slew of new regulations facing the industry will be bigger units that burn more coal.

"The overall impact, it's still not horrible," Braverman said. "While you are seeing a decrease in capacity, the decrease in generation is not that great, so it's a relatively good story."

Braverman said he predicts a 4% drop in coal-fired generation by 2020, and that older, high-heat rate plants are more at risk of being shuttered.

But larger, more efficient coal-fired plants will continue to operate and provide baseload generation, Braverman said.

However, Braverman said it's unlikely any new coal-fired plants will be built in the next five years due to the uncertain impact of new and proposed regulations.

The uncertainly also impacts utilities that need to make capital expense decisions in the next few years regarding their coal plants.

"It's hard for a regulated utility to be willing to risk the wrath of a regulator if they guess wrong and invest in controls for a plant that is eventually replaced," Braverman said.

As for the coal industry, Braverman said there will be winners and losers among the different coal-producing regions, but that the losers may be able to make up the difference with exports.

Braverman added that existing regulations have reduced emissions, which isn't often reported.

"Despite the view of people that things are getting worse, they are getting incredibly better," Braverman said.

--Andrew Moore, andrew_moore@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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