Dive Brief:

Luminant plans to retire its coal-fired Monticello power plant in Titus County, Texas, in January.

The retirement is contingent upon a 60-day review by the Electric Reliability Council of Texas (ERCOT) to determine if the units are needed for reliability.

Luminant’s parent company, Vistra, estimates it will record one-time charges of $20 million to $25 million in the third quarter of 2017 related to the retirement.

Dive Insight:

Luminant’s announcement that it plans to retire its Monticello coal plant comes as the debate over the Department of Energy’s Notice of Proposed Rulemaking (NOPR) on providing compensation for baseload generation heats up.

In the most recent development, Energy Secretary Rick Perry defended his action, saying the NOPR is “not a directive” for the Federal Energy Regulatory Commission, which came on the heels of FERC Chairman Robert Powelson’s criticism of the plan.

ERCOT would be exempt from any FERC ruling — Texas’s power system lies outside of federal jurisdiction. But Luminant’s move underscores the marketplace dynamics challenging coal plants and for which the DOE is trying to find a policy remedy.

In the end, Luminant’s decision was not based on environmental regulations and policies, but on market economics. “The market's unprecedented low power price environment has profoundly impacted its operating revenues and no longer supports continued investment,” Curt Morgan, Vistra Energy's president and CEO, said in a statement on Monticello’s closing.

Luminant said it is continuing its reclamation work at the plant's mines, which ceased operation in the spring of 2016. Monticello was fired by lignite from those mines until about two years ago when the plant began to import Powder River Basin coal from Wyoming.

The Sierra Club welcomed the retirement announcement, saying Monticello was one of the dirtiest coal plants in the United States. The environmental organization said Monticello would be the 259th coal plant to retire or announce retirement in the U.S. since 2010. If three more coal plants retire, the U.S. would have half as many operating coal plants as it did seven years ago, the group said.