Electricity Markets

FirstEnergy Solutions seeks DOE emergency order on PJM generation talks

FirstEnergy Solutions (FES) on March 29 asked Energy Secretary Rick Perry to issue an emergency order directing the PJM Interconnection to immediately begin negotiations to secure the long-term capacity of certain nuclear and coal-fired plants in the region and to compensate their owners "for the full benefits they provide to energy markets and the public at large, including fuel security and diversity."

FES is a competitive generation subsidiary of investor-owned FirstEnergy Corporation.

FES filed an application for an order under Section 202c of the Federal Power Act, which gives the Secretary of Energy extraordinary powers to confront emergencies.

The threat, FES said, is caused by the premature retirement of plants that have many years of useful life but cannot operate profitably under current market conditions. The retirement of such "at-risk" plants is accelerating, the company said.

FES noted that on March 28 it notified PJM and the Nuclear Regulatory Commission that its two nuclear plants in Ohio and one in Pennsylvania, with combined capacity of 4,048 megawatts, would be deactivated over the next three years. Plant closures are subject to review by PJM for reliability impacts.

In a news release related to its request to Perry, FES said that the Department of Energy “noted in a new study that vulnerability of the grid was vividly demonstrated this past winter when a cold snap gripped the East from December 27 through January 8, causing a surge in demand for natural gas for home heating, which, along with pipeline problems and price spikes, reduced its availability for power generation. Had nuclear and coal-fired not outperformed during that period, PJM and the Northeast grid would likely have faced outages and other reliability problems, the agency said.”

FES nuclear plants located in Ohio, Pennsylvania

The FES plants that could be deactivated are:  the 908-MW Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, (scheduled for retirement in 2020), the 1,842-MW Beaver Valley Power Station in Shippingport, Pa., (scheduled for retirement in 2021), and the 1,268-MW Perry Nuclear Power Plant in Perry, Ohio, (scheduled for retirement in 2021). While FES seeks legislative policy solutions as an alternative to deactivation or sale, the plants will continue normal operation.  

In 2017, the nuclear plants contributed about 65 percent of the electricity produced by the FES fleet.

FES said it will continue working to find legislative solutions that would keep the plants open but it will also look for potential buyers. It’s expected that approximately 2,300 plant employees would be affected by the plant deactivations.

The Institute of Nuclear Power Operations and the Nuclear Energy Institute, two organizations that support the U.S. nuclear industry, have also been notified. 

A two year-plus lead time is needed for the complex preparations for a potential plant deactivation which includes preparing a detailed decommissioning plan and working with the NRC to amend plant licenses.

The announcement comes after FirstEnergy in November 2016 said that it would exit competitive, or non-regulated, generation due to weak power prices, insufficient results from capacity auctions, and weak demand forecasts. A strategic review of FES’s two remaining coal plants and one natural gas plant totaling 5,245 MW will continue as part of that plan.

The announcement by FES of its plans to close the nuclear plants follows similar decisions by other utilities in the U.S.

For example, in February of this year, Exelon Generation announced the retirement of its Oyster Creek Generating Station in New Jersey which is scheduled to be permanently shut down in October 2018, at the end of its current operating cycle.

Exelon was required to close the Oyster Creek plant in December 2019 as part of an agreement with the state of New Jersey. The decision to shut down earlier will help Exelon “better manage resources as fuel and maintenance costs continue to rise amid historically low power prices,” the company said.