Latrobe company bets on waste coal plant despite weak outlook

A Latrobe mining company is buying the world’s largest waste coal burning power plant on the banks of the Conemaugh River.

Robindale Energy Services & Associated Cos, a family-run group of companies, has been hauling picked-over, low-quality coal from gob piles in Pennsylvania to the Seward Power Plant near New Florence since the plant opened in 2004. Now, it plans to take over the facility from NRG Energy, the New Jersey-based generation giant.

The plant that Robindale is buying as well as another natural gas-fired station in Illinois will bring NRG a total of $138 million. NRG Energy did not break out the price for the properties separately.

The Seward acquisition, which will close in the first quarter of next year pending regulatory approval, comes at a time when coal plants are shuttering from low demand, competition from natural gas and increasing environmental costs.

Jud Kroh, Robindale’s CFO, isn't deaf to that reality. “Short term, we feel the energy markets are going to remain weak and may even get weaker,” he said.

But he sees a future for the Seward plant, a 525-megawatt facility that has 84 employees.

Robindale has run only one coal power plant before. That facility, in Shamokin Dam on the Susquehanna River, closed last year citing a tough market for coal and pressure from environmental regulations.

Earlier this year, Robindale’s subsidiary Sunbury Generation and a Texas-based private equity fund announced a partnership to convert that shuttered coal plant into a 1,000-megawatt natural gas power station that would use Marcellus Shale gas.

That isn’t likely to happen at Seward, in part because the relatively new plant was specially built to burn waste coal, Mr. Kroh said. “Also, we feel that burning natural gas long term would not help facilitate the needed environmental remediation in Western Pennsylvania,” he said.

Since Seward opened, Robindale has removed 36 million tons of waste coal from abandoned piles where it would have otherwise continued leaching acid mine drainage into streams and might have caught on fire. The piles are a remnant of Pennsylvania's industrial past — long-gone coal and steel companies whose environmental legacy runs orange and red along the state’s waterways.

To encourage remediation, Pennsylvania counts waste coal as an alternative fuel for electric generation and allows its users to earn renewable energy credits, just as someone generating electricity from solar and wind could do.

But waste coal plants face an uncertain future under the federal Clean Power Plan, which seeks substantial carbon dioxide reductions from the power sector.

While the law will be litigated for years, Pennsylvania waste coal advocates have already begun urging the state and the federal government to exempt CO2-heavy waste coal emissions from regulation under the plan, arguing that letting the waste coal remain on the ground in unlined piles does more damage to the environment than burning it.

Mr. Kroh said he expects waste coal will have a place under the state’s Clean Power Plan, which is scheduled to be drafted by September.

“We view the Seward power station and the other waste coal plants as a carbon neutral energy source, which represents a very small portion of the state’s overall CO2 emissions,” he said.

Robindale has nearly 600 employees and contractors and is run by Mr. Kroh and his father, D. Scott Kroh, a former Alpha Natural Resources executive.

The companies under the Robindale umbrella specialize in coal mining and material handling and accounted for more than $500 million in sales last year, according to a company description at a recent financial management conference in Pittsburgh.

Anya Litvak: or 412-263-1455.

First Published December 2, 2015 5:29 PM

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