The coal-fired Grand Lake Generating Station will be closed next year when its operating licence expires, NB Power announced Tuesday.

David Hay, the Crown corporation's president and chief executive officer, said running the 78-year-old power plant was no longer economical and it will cease operating in June 2010.

The corporation also announced that its NB Coal division - also located in the small community of Minto - will be shuttered in December since its only customer is being shut down.

"These have been strong, reliable assets that have come to the end of their life," Hay said in a statement.

"NB Power has been a part of the community for more than 75 years, and this decision was very carefully considered."

Executive vice-president Darrell Bishop said the plant, long considered among the dirtiest in the province because of its mercury and sulphur dioxide emissions, could not meet the requirements of new environmental regulations.

"The plant is old and needs some significant refurbishment," he said. "There's a capital expenditure that's more than can make the plant run economically in the future."

David Thompson, of the Conservation Council of New Brunswick, said the reaction of the environmental community was good news.

"It's one more bad smoke stack gone. It was a plant which didn't have any pollution controls on it," said Thompson.

Jobs impacted

However, NB Power will offer the employees at the generating station jobs elsewhere and workers from the NB Coal division will be offered packages. The mine workers have already voted on and accepted the package.

"Do I have a choice? They're sending me home," said Dwayne Barton, a mine worker. "They could send me home with nothing or send me home with what we agreed to. So, I have to be satisfied with it because that's what I'm getting."

The generating station was not going to be able to meet federal mercury emission rules that take effect in 2012, according to NB Power.

The Crown corporation will now have to file an environmental impact assessment on dismantling the plant.

Built in 1931, the Grand Lake station was NB Power's first thermal power plant. Its maximum output is 57 megawatts.

The Department of Environment conducted tests in Grand Lake in 2007 after residents raised concerns about arsenic and thallium levels in the area as a result of the coal burned at the generating station.