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Bankruptcy judge rejects FirstEnergy Solutions' attempt to cancel coal contract

The federal bankruptcy court rejected FirstEnergy Solutions Corp.'s attempt to cancel a "burdensome" 6.5 million-ton annual coal supply contract with Murray Energy Corp.

U.S. Bankruptcy Judge Alan Koschik during an Oct. 3 hearing denied the FirstEnergy Corp. competitive subsidiary's request for permission to reject the last 10 years of a 22-year contract to buy coal from Murray Energy subsidiaries McElroy Coal Co. and Consolidation Coal Co., Law360 reported. Murray Energy argued FirstEnergy Solutions, or FES, can't reject the coal contract without also rejecting a waste disposal agreement Murray Energy and FES subsidiary FirstEnergy Generation LLC reached in 2016, according to the Law360 report.

FES in a June 27 court filing argued it could save approximately $20 million in 2018 and approximately $14.5 million in 2019 by rejecting the "burdensome" contract for supplying coal to its 2,510-MW Bruce Mansfield power plant in Beaver County, Pa. FES said it needs only 2.5 million tons of coal in 2018 and projects it will need only 3.6 million tons of coal to operate in 2019.

James Mellody, vice president of fuel and unit dispatch at FirstEnergy Generation, said in a declaration that part of the reason for reduced coal requirements was a Jan. 10 fire at the plant.

Bruce Mansfield also is among four fossil-fuel plants FES plans to shut down in 2021 and 2022 due to unfavorable market conditions. Murray Energy's Marshall County mine was the only coal supplier reported to supply the Bruce Mansfield plant in 2018, according to S&P Global Market Intelligence data.

FES, its subsidiaries and FirstEnergy Nuclear Operating Co. on March 31 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in the Northern District of Ohio.