Somerset power plant put up for sale

Dominion Resources Inc. said Thursday it plans to get out of the wholesale power business and reduce debt by selling its massive Brayton Point plant in Somerset.

Brayton Point, which includes three coal-fired units and one operated on oil or natural gas, generates up to 1,536 megawatts of electricity, enough for about 1.5 million homes, according to the Virginia-based company. Located across Mount Hope Bay from Fall River, it has about 190 employees.

The decision to put Brayton Point on the market follows last month’s completion of a deal by Dominion to sell the Salem Harbor Power Station in Salem to Footprint Power LLC.


Once a buyer is found, Dominion will not own any power plants in Massachusetts, but it will still have two in New England — the Millstone Power Station, a nuclear power plant in Waterford, Conn; and the Manchester Street Power Station, a natural gas-fired power station in Providence.

Dominion also said Thursday it intends to sell two power plants in Illinois. All three sales are expected to be completed in the first half of 2013.

Brayton Point — which Dominion has owned since 2005 — is known as a “merchant” power station, meaning it sells power on the wholesale market, not directly to consumers. Prices on the competitive wholesale market, which are not regulated, can fluctuate dramatically, and in recent years energy prices have moved steadily down.

Chief executive Thomas Farrell said in a statement the company wants to focus on serving Dominion’s retail customers in 15 states, where rates are set by state officials and the Federal Energy Regulatory Commission.

One factor driving the sale is the low price of natural gas. Production has risen dramatically because of hydraulic fracturing — or fracking — said Cynthia Pross, an analyst at IHS, an information services company based in Englewood, Colo.


“It’s difficult for coal-fired powered plants to compete” with natural gas, Pross said.

In addition, ever-tightening environmental regulations from the Environmental Protection Agency and the state of Massachusetts are increasing the cost of generating power from coal.

Thursday’s decision by Dominion to sell Brayton Point was cited by a cluster of environmental groups as a sign that the future of coal is dimming, even though a new owner will likely continue to operate it as a primarily coal-powered plant.

“Dominion’s retreat from the merchant coal plant business is a clear indication that they see the writing on the wall for coal power,” said Shanna Cleveland, staff attorney with the Boston-based Conservation Law Foundation. “Coal power’s days are numbered, and we will continue to work to hasten the retirement of these aging, polluting plants in Somerset and beyond.”

Jim Norvelle, a spokesman for Dominion, downplayed the role environmental factors played in the move to sell, saying the company has invested $1 billion in reducing the power plant’s environmental impact.

Instead, Norvelle cited the economic impact of cheap natural gas.

“The recent ample supply of shale gas and its impact on competitive market prices is a big change in the entire US energy industry, not just for Dominion,” he said. “Its impact will be felt for the next three-to-five years, perhaps longer, in keeping market prices low. Natural gas-fired generation is setting the price in power markets, challenging all other forms of generation in economic operation.”

D.C. Denison can be reached at denison@globe.com.