FirstEnergy Throws in the Towel on Coal Plants

FirstEnergy Solutions Corp. (FES) notified PJM Interconnection, the regional transmission organization (RTO), of its plans to deactivate four fossil-fuel generating plants in 2021 and 2022.

In a press release issued on August 29, the company said it "is closing the plants due to a market environment that fails to adequately compensate generators for the resiliency and fuel-security attributes that the plants provide."

More Than 4 GW of Capacity Slated to Close

The power plants to be deactivated are:

• Eastlake 6, Eastlake, Ohio (24 MW, coal), June 1, 2021.
• Bruce Mansfield Units 1-3, Shippingport, Pennsylvania (2,490 MW, coal), June 1, 2021.
• W.H. Sammis Diesel, Stratton, Ohio (13 MW, diesel oil), June 1, 2021.
• W.H. Sammis Units 5-7, Stratton, Ohio (1,490 MW, coal), June 1, 2022.

In the interim, the plants will continue normal operations.

FirstEnergy has been suffering steep losses in competitive markets. In November 2016 it announced a plan to exit competitive generation and become a fully regulated company. On July 22, 2016, the company announced the planned closure of Sammis Units 1-4 in May 2020. It also announced on February 16, 2018, that it would sell or close the two-unit, 1,300-MW Pleasants Power Station in Willow Island, West Virginia, by January 1, 2019.

Report: Power Costs Will Increase in PJM

Research conducted by Energy Ventures Analysis Inc. (EVA)-an Arlington, Virginia-based energy consulting firm-found that "the cost of power in the PJM market would increase by $2.0 billion annually due to increased energy and capacity market prices" if the Pleasants, Sammis, and Bruce Mansfield facilities were all to retire at the beginning of 2019. The study was commissioned by the National Mining Association, a trade organization that represents the interests of the mining industry including several coal mining companies.

EVA estimated that "the additional cost to support the three coal plants would total about $130 million above the revenues these plants are likely to receive in the power markets." Furthermore, it said the capital cost to replace the coal plants with the same amount of new combined cycle gas turbine capacity would be $5.7 billion. EVA suggested merchant power producers would be "highly unlikely" to invest the capital to do so without "significantly higher" power prices.

Not everyone agrees. In a statement, Neil Waggoner, state representative for Sierra Club's Beyond Coal Campaign in Ohio, said, "FirstEnergy should simply retire these uneconomic coal plants and help affected workers and communities through the transition, rather than suggest they could be saved by an expensive federal bailout. Time and again, it's been shown that there are no reliability concerns as aging uneconomic coal plants retire."

Nuclear Closures Will Also Affect PJM

The market challenges aren't isolated to fossil fueled-plants, however; FES announced on March 28, 2018, that it would also deactivate its three nuclear plants in coming years. The 908-MW Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, is slated to close in May 2020; the Beaver Valley Power Station in Shippingport, Pennsylvania, will close Unit 1 (939 MW) in May 2021 and Unit 2 (933 MW) in October 2021; and the 1,281-MW Perry Nuclear Power Plant in Perry, Ohio, will be shuttered in May 2021.

"Our decision to retire the fossil-fueled plants was every bit as difficult as the one we made five months ago to deactivate our nuclear assets," said Don Moul, president of FES Generation Companies and Chief Nuclear Officer. "The action in no way reflects on the dedication and work ethic of our employees, nor on the strong support shown by their union leaders and the communities where the plants are located.

"As with nuclear, our fossil-fueled plants face the insurmountable challenge of a market that does not sufficiently value their contribution to the security and flexibility of our power system," Moul said. "The market fails to recognize, for example, the on-site fuel storage capability of coal, which increases the resilience of the grid."

A Secure and Reliable Grid?

Moul's comments seemed to espouse a rule proposed by the U.S. Department of Energy (DOE) on September 29, 2017, which directed the Federal Energy Regulatory Commission (FERC) to mandate that competitive power markets develop and implement market rules to "accurately price" what it called "fuel-secure" generation.

The DOE's "Grid Resiliency Pricing Rule" directed FERC to exercise its authority under sections 205 and 206 of the Federal Power Act and require that independent system operators (ISOs) and RTOs "establish just and reasonable rates for wholesale electricity sales" for power plants that showed "reliability and resiliency attributes."

However, FERC rejected DOE's proposed rule on grid reliability and resilience pricing in January 2018. FERC instead directed RTOs and ISOs to submit to the commission information on certain resilience issues and concerns identified to allow it to "holistically" examine the resilience of the bulk power system.

FES noted in its release that the federal government is currently considering policy measures that would support fossil and nuclear generating facilities considered at risk in the current market environment, but vital to grid security and reliability. The company said, "Depending on the timing of any federal policy action, deactivation decisions could be reversed or postponed."

-Aaron Larson is POWER's executive editor (@AaronL_Power, @POWERmagazine).

The post FirstEnergy Throws in the Towel on Coal Plants appeared first on POWER Magazine.