FirstEnergy Corp. (FE) subsidiary FirstEnergy Solutions Corp. late Wednesday announced plans to shutter four fossil fuel power plants, including Pennsylvania’s largest coal-fired facility, by 2022.
The move comes after FirstEnergy Solutions and another FE subsidiary, FirstEnergy Nuclear Operating Co., filed for bankruptcy earlier this year, citing prolific natural gas supplies in the Appalachian Basin and other market forces that eroded profits from power sales.
The other three plants, including two that burn coal and another that burns diesel oil, are in Ohio. All of them generate 4,017 MW of electricity. The announcement also comes after FirstEnergy Solutions disclosed plans earlier this year to shutter three nuclear power plants in both states by 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 FirstEnergy Solutions Generation Cos. He said “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.
“The market fails to recognize, for example, the on-site fuel storage capability of coal, which increases the resilience of the grid.”
Merchant generators have faced stiff competition in the open market, but it has intensified with an increasingly diversified resource mix. In recent years, renewable sources have become more competitive and an abundance of low-cost natural gas has caused electricity prices to plummet, undermining coal and nuclear plants in the process.
FirstEnergy has lobbied federal and state governments to better value the baseload power that coal and nuclear provide as the wholesale market undergoes a seachange. President Trump’s administration is considering a plan to prop up the ailing resources, and FirstEnergy said “depending on the timing of any federal policy action, deactivation decisions could be reversed or postponed.”
The subsidiaries filed for bankruptcy about a year after FE said it would exit the competitive power generation business and transition to a fully regulated company.
The plant closures are subject to a review by regional grid operator PJM Interconnection. If PJM determines that one or more of the units is needed for grid reliability, FirstEnergy Solutions said it would provide information and estimates of the costs and timing to keep them open. The company has also filed a request to exempt all of the coal and nuclear plants slated for closure from PJM rules requiring that they bid into the market during annual capacity auctions.
FE’s lobbying efforts have been derided by the gas industry, environmentalists and others. The Sierra Club called the company’s announcement “tone deaf,” noting that the 2,490 MW Bruce Mansfield facility that is to be closed in Pennsylvania once burned seven million tons of coal annually. While the organization welcomed the news, it urged the company to close the plant in a “timely and orderly” manner.
Dozens of gas-fired power plants have been proposed or are under construction in the Appalachian Basin. Increasing renewables in the PJM market have also provided stiff competition for baseload power sources like coal and nuclear.
The closure announcement came just days after the FE subsidiaries said they had entered into a definitive settlement in bankruptcy proceedings that would address all potential claims. FE said it was another step toward transitioning to a fully regulated company. The agreement must be approved by the U.S. Bankruptcy Court for the Northern District of Ohio.