Despite a billion dollar investment in plant upgrades, Dominion's Brayton Point Coal Plant has been deemed financially unsustainable in a report commissioned by the Conservation Law Foundation.

The independent analysis released by the Institute for Energy Economics and Financial Analysis found that the once profitable 50-year-old power plant's earnings before interest, taxes, depreciation and amortization are plummeting due to a "perfect storm of market conditions" that are projected to continue at least through 2020. These conditions make it unlikely that Brayton Point will ever recoup its recent $1 billion investment in upgrades to the facility and likely that it will continue to bleed money.

"The market conditions have changed and are continuing to change for old coal plants. There is nothing on the horizon that shows that this power plant will be able to return to financial health," said David Schlissel a co-author on the report. "In fact, even the most optimistic scenario shows that Brayton Point cannot produce earnings that would cover its costs and produce a return for equity investors at any time through 2020."

Brayton Point's earning plummeted 93 percent from $345 million in 2009 to $24 million in 2012 due to market conditions like the steep decline in natural gas prices and related drops in wholesale energy market and capacity prices.

It is unlikely that future energy market prices, ISO-NE capacity market prices, plant generation and coal prices will lead to earnings high enough to provide adequate recovery of capital or return on investment, according to the report.

"Brayton Point, like many other old coal plants in New England and around the country, is at a tipping point," said N. Jonathan Peress, vice president and director of Conservation Law Foundation's Clean Energy and Climate Change program. "Dominion and its shareholders need to decide whether to keep pumping money into Brayton Point with little chance of a return, or to let it go."

For more:
- see the report

http://www.fierceenergy.com/story/perfect-storm-market-conditions-bad-coal-plants/2013-03-06?utm_medium=nl&utm_source=internal