GenOn Will Shut Plants Through 2015 on Environmental Rules

GenOn Energy Inc. (GEN), the third-largest U.S. independent power producer by market value, expects to shut about 13 percent of its generating capacity by May 2015 because of environmental regulations.

Shutdowns will begin in June at the units, which don’t generate enough profit to cover the costs of complying with the rules, Houston-based GenOn said today in a statement. The plants, located at eight sites in Pennsylvania, Ohio and New Jersey, generate 3,140 megawatts in the wholesale market overseen by PJM Interconnection. Except for one unit, all of the plants burn coal, according to GenOn’s website.

GenOn joins other power-plant owners, including FirstEnergy Corp. (FE) and American Electric Power Co., that have announced closures because of environmental rules. A U.S. Environmental Protection Agency air-pollution rule to reduce power-plant emissions that cross state lines was halted by a federal court last year. Separate regulations to cut mercury pollution are scheduled to go into effect in 2015.

GenOn will have 19,490 megawatts of generating capacity after these and other announced closures and completion of a gas-fueled plant in California. Total current capacity is 23,692 megawatts, according to the company’s website.

An overview of GenOn's coal-fired power plant in Alexandria, Virginia on September 1, 2011. Old Town Alexandria is in the background. The power plant is scheduled to close in 2012. Photograph: Tracy A Woodward/The Washington Post via Getty Images Close

An overview of GenOn's coal-fired power plant in Alexandria, Virginia on September 1,... Read More

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An overview of GenOn's coal-fired power plant in Alexandria, Virginia on September 1, 2011. Old Town Alexandria is in the background. The power plant is scheduled to close in 2012. Photograph: Tracy A Woodward/The Washington Post via Getty Images

The announcement was made before regular trading began on U.S. markets. GenOn fell 5.7 percent to $2.30 yesterday in New York.

Calpine Corp. (CPN) and NRG Energy Inc. (NRG) are the largest U.S. independent power producers by market value. Independent power producers generate electricity without a utility unit, which has its rates set by local regulators.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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