Salem power plant could be converted to natural gas generation

Dominion's Salem Harbor Power Station in Salem, Massachusetts The massive Salem Harbor Power Station in Salem, Massachusetts, could soon be converted into a gas-fired generation facility, according to The Boston Globe.

The power plant currently makes use of a mix of coal and oil, and once produced 745 megawatts of electricity for the region. But tightening environmental regulations and rising fuel prices have forced plant owner Dominion (NYSE:D), the Virginia-based utility and energy company, to slowly scale back its operations, shuttering two generating units at the end of last year.

A recent study funded by the state, however, suggests that the coal plant could be cost effectively repurposed into a natural gas-fired power plant. Though the plan remains incomplete, Dominion is in talks aimed at selling the site to New Jersey-based Footprint Power.

At present, the plant cannot be closed because of its important role in regional grid stability, but it should be shut down by the end of 2014 and possibly sooner.

"If conditions changed and a reliability study were to show that the generator was no longer needed to ensure reliability, the generator would be permitted to leave the capacity market,’" Dominion spokeswoman Marcia Blomberg told the Globe.

The Salem News notes a federal court settlement requires that any future owners of the site cannot use coal-fired generation.

Analyses of the natural gas market can be found at PennEnergy's Research area.

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