Luminant, the largest electricity generator in the U.S. state of Texas, decided it would have to close facilities to comply with the U.S. Environmental Protection Agency's Cross-State Air Pollution Rule. The rule requires U.S. power generators to make drastic reductions in emissions beginning January 1, 2012. While Luminant is preparing to meet the rule's compliance deadline, it also filed a legal challenge in an effort to minimize the harm this rule will cause to power supply reliability in Texas.

To meet what it terms the rule's unrealistic deadline and requirements, Luminant decided to idle two generating units and cease mining Texas lignite at three operations. The company will also have to implement several other actions to reduce emissions, including making substantial investments in its facilities.

The Monticello power plant in Northeast Texas will idle Units No. 1 and 2, approximately 1,200 MW. Monticello Unit 3 will switch from Texas lignite to Powder River Basin (PRB) coal. The supporting Thermo and Winfield mines will cease operations. Units No. 1 and 2 at the Big Brown power plant in Freestone County will also switch to PRB coal. Mining will cease at the supporting Big Brown/Turlington mine.

Luminant will continue to mine Texas lignite at its Kosse mine, which supports the Oak Grove power plant; at the Three Oaks mine, which supports the Sandow power plant; and at its Martin Lake mines, which support the Martin Lake power plant.

The company expects to invest approximately $280 million by the end of 2012 and estimates it will spend more than $1.5 billion before the end of the decade in environmental control equipment to comply with regulatory requirements. Luminant said the rule's 2012 deadline will not allow for the permitting, construction and installation of new equipment in time to avoid the announced closures.

Luminant submitted to the EPA a request for reconsideration and stay of the new rule on August 5, on which the agency has not acted. The company then filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit asking the court to invalidate CSAPR as to Texas. As part of its action, Luminant also plans to ask the court to stay the applicability of the EPA rule.