Louisville, Kentucky — FirstEnergy is monitoring recent efforts by New York to help subsidize the continued operation of at-risk nuclear plants owned by Exelon and Entergy, and may support a similar scenario for its three nuclear plants in Ohio and Pennsylvania, a company official said Thursday.
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James Pearson, executive vice president and chief financial officer of Akron, Ohio-based FirstEnergy, told the Barclays CEO Electric-Power Conference in New York that his company is working hard to "de-risk" its multi-state operations in an era of low power prices, coal plant retirements and sparse load growth.
FirstEnergy, he said, wants to "convert megawatts from the unregulated market to a regulated construct."
On August 1, the New York Public Service Commission approved a Clean Energy Standard proposed by Democratic Governor Andrew Cuomo that is expected to result in billions of dollars in economic support for Exelon's 1,900-MW Nine Mile Point and 614-MW R.E. Ginna reactors in upstate New York, as well as Entergy's 838-MW James A. FitzPatrick nuclear plant in Oswego, New York.
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Chicago-based Exelon, the nation's largest nuclear generation, is in the process of acquiring FitzPatrick.
Pearson, in response to a question, praised New York for its "very reasonable solution" in attempting to keep nuclear plants running. FirstEnergy, he noted, owns nearly 4,000 MW of nuclear generation as represented by the 1,260-MW Perry and 908-MW Davis-Besse plants in Ohio and the 1,800-MW Beaver Valley plant in Pennsylvania.
While he did not disclose specifics, Pearson said "the discussion is moving along in Ohio with potentially doing some type of restructuring" of the state's electricity market.
FirstEnergy already gets more than 80% of its earnings from regulated operations and company officials have said for months they eventually want the company to be totally regulated.
In neighboring Pennsylvania, nuclear power "makes up a significant amount of generation," he added. "We're optimistic we may be able to construct something that meets these states' requirements going forward."
Tricia Ingraham, a FirstEnergy spokeswoman, said following the presentation that her company, at least for now, is "watching to see how things develop" in New York.
FIRSTENERGY WANTS TO MOVE PLEASANTS COAL PLANT TO REGULATED SUBSIDIARY
Pearson repeated his company's previously stated desire to transfer its 1,300-MW unregulated Pleasants coal-fired baseload power plant along the Ohio River in Willow Island, West Virginia, to its regulated Monongahela Power subsidiary in West Virginia.
Although FirstEnergy has not made a formal filing with the West Virginia Public Service Commission, that idea already is eliciting concern from several groups, including the PSC's Consumer Advocate Division and commission staff that want FirstEnergy to conduct a formal request for proposals process before it seeks the transfer.
American Electric Power, also based in Ohio, is actively supporting a re-regulation effort in the Midwestern state. No legislation to that effect is expected to pass the General Assembly this year, although a big push is anticipated in the first half of 2017.
"AEP has taken the lead on that right now," Pearson said.
FirstEnergy's immediate priority is to secure PUC approval for the company's pending electric security plan that includes a "retail rate stability" rider, or surcharge, denounced by critics as a "transition charge" and unnecessary.
This would be the company's fourth such rate plan in the past decade. Pearson predicted a final PUC order will come soon, most likely in late September or early October. Public hearings on the ESP wrapped up in late August.
"We're very optimistic ESP 4 will come to fruition in the very near term," he said.
FirstEnergy announced plans in July to retire 856 MW of coal generation in Ohio, including Units 1-4, totaling 720 MW, at its 2,233-MW Sammis baseload plant, by May 2020, and 136-MW Bay Shore Unit 1 by October 2020.
The company already has shuttered several thousand megawatts of coal generation in recent years. Coal, however, still accounts for 56% of its nearly 17,000 MW of generation capacity. Nuclear is next at 24%, followed by hydro, wind and solar, 11%; and natural gas, 8%.
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--Edited by Jason Lindquist, email@example.com