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FirstEnergy to abandon 856 MW of Ohio coal units, record $647M Q2 impairment

Challengingmarket conditions have prompted FirstEnergy Corp. to abandon 856 MW of coal-firedcapacity in Ohio, a move that would result in a second-quarter 2016 pretaximpairment charges of approximately $647 million.

In aJuly 22 statement, FirstEnergy said it will retire units 1-4 at the seven-unitW.H. Sammis inStratton, Ohio, in May 2020. The four units have a combined capacity of 720 MW.The company also plans to sell or deactivate the 136-MW unit 1 in Oregon, Ohio,by October 2020. The plan to deactivate the five units would not result in jobreductions, the company added.

Sammisunits 1-4 came online between 1959 and 1962, while Bay Shore unit 1 came onlinein 1955. The five units contributed about 4% of the electricity produced by thecompany's power plants in 2015.

Theproposed plan is subject to PJMInterconnection LLC review for any reliability impacts. Thecompany said it does not plan to offer the five units into the PJM capacityauction for the 2020-2021 time frame.

"Wehave taken a number of steps in recent years to reduce operating costs of ourgeneration fleet," FirstEnergy Generation President Jim Lash said in astatement. "However, continued challenging market conditions have made itincreasingly difficult for smaller units like Bay Shore and Sammis Units 1-4 tobe competitive. It's no longer economically viable to operate these facilities."

Meanwhile,the company will continue to operate 1,490 MW of capacity at Sammis units 5-7.