In the coming decade, as the economics of coal power continue to erode and urgency grows to mitigate coal’s significant climate and public health burdens, many more plants and mines will retire. Replacing coal with clean energy can create a price spike for customers if they are required to pay for the new clean assets on top of their existing coal contract or tariff. Phaseout can present an existential threat for displaced coal workers who lack a robust social safety net and for communities dependent on taxes from coal businesses to fund basic services. The 2020 report How to Retire Early outlined a three-part approach to mitigate these challenges: refinancing existing coal obligations, reinvesting in clean energy, and funding transition assistance. Over the past year, utilities in three US states have received approval to deploy ratepayer-backed bonds, commonly known as securitization, to mitigate the near-term impacts of coal plant retirements.
By Christian Fong and Sam Mardell. Rocky Mountain Institute. March 4, 2021.