NS says regulatory move won't aid coal-fired power plants

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BOSTON – The Trump administration’s proposed rollback of federal clean air regulations, designed to give coal-fired power plants a boost, is unlikely to revive Norfolk Southern’s domestic utility coal volumes.

“For the plants that we serve, we don’t see that having that much of an impact,” Chief Financial Officer Cindy Earhart told an investor conference last week.

What does have an impact, she says, is the low price of natural gas, the fuel that now provides baseload power generating capacity. Renewable energy is becoming a bigger player, too, from solar in the Carolinas to wind power in the Midwest, she adds.

All of this puts continued pressure on coal as utilities turn to lower-cost sources of power.

“We think coal will be around for quite a while. But I don’t think we see utility coal as growing,” Earhart told the Cowen & Co. Global Transportation Conference.

NS serves about 76 coal-fired power plants, down from 100 in 2013, according to the railroad’s annual reports.

The railroad’s coal volumes have plummeted in recent years, led by the decline in domestic utility coal that last year accounted for 59 percent of NS coal tonnage. NS domestic utility coal carloads have dropped 44 percent since 2011.

NS domestic utility coal tonnage was up sightly last year, however, largely due to the impact of weather and utilities depleting unusually high stockpiles of coal.

The Trump administration last month proposed a repeal of the federal limits on carbon emissions from power plants. Instead, states would be given regulatory authority.

The regulatory changes are expected to take years to implement due to anticipated legal challenges from several states and environmental groups.

Utility executives have said they don’t expect the new regulations, if implemented, to have a major impact on the industry.

American Electric Power, for example, is investing in renewable power projects as it shifts away from coal toward cleaner, cheaper alternatives driven by market forces. The company's plans for a massive wind farm, however, was rejected this summer by regulators in Texas.

“Clearly, our shareholders and customers expect a clean-energy economy,” American Electric CEO Nicholas Akins told The Wall Street Journal last year.

— Updated at 7:50 a.m. on Sept. 11 to correct status of American Electric Power's renewable energy projects.

NEWSWIRETrains News Wire

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