Investor-owned utility FirstEnergy is pressing for legislation in Ohio that would provide financial support to two nuclear power plants through a "zero emission credits" program modeled after ones in Illinois and New York.
Without additional revenue, Ohio-based FirstEnergy may shutter its 908-megawatt Davis-Besse and 1,268-MW Perry nuclear plants, which sell their power into the PJM Interconnection market.
FirstEnergy is in the process of selling off or exiting its competitive generation operations by mid-2018 as the company transforms into a purely regulated utility company. The company owns 13,162 MW of unregulated generation.
"We continue to assess and evaluate a number of strategic alternatives for our companies — for our competitive business, including asset sales, legislative or regulatory initiatives for generation that recognizes environmental or energy security benefits, alternatives for our retail business and financial restructuring," Charles Jones, FirstEnergy president and chief executive officer, said Wednesday during an earnings conference call with analysts.
The company took a $9.2 billion write down on its competitive assets in the fourth quarter, which have been challenged by low wholesale energy and capacity prices. Also, FirstEnergy continues to consider filing for bankruptcy protection for FirstEnergy Solutions, a competitive power supplier, and FirstEnergy Nuclear Operating Co., according to Jones.
In the near-term, the Akron, Ohio-based utility company's main focus is its two nuclear plants, according to Jones. "We have had meaningful dialogue with our fellow utilities and with legislators on solutions that can help ensure Ohio's future energy security," Jones said.
The company's top priority is preserving the Davis-Besse and Perry plants and legislation for a zero-emission nuclear program is expected to be introduced soon in the Ohio Legislature, according to Jones.
"We are advocating for Ohio's support for its two nuclear plants, even though the likely outcome is that FirstEnergy won't be the long-term owner of these assets," Jones said.
Without extra revenue through a zero emission credit program, the FirstEnergy nuclear plants would likely be retired, according to Jones. "I don't think there's any guarantee, absent some other support for these units, that they're going to keep running far into the future," he said.
Illinois and New York have provided support to struggling nuclear plants through zero-emission credit programs.
In December, Illinois Gov. Bruce Rauner signed S.B. 2814, which will provide about $235 million a year through a 10-year contract to two nuclear power plants owned by Exelon.
The 1,065-MW Clinton and 1,871-MW Quad Cities plants in Illinois faced looming shutdowns.
And in August, the New York Public Service Commission approved a renewable energy plan that requires load serving entities to buy zero-emissions credits over 12 years from the cash-strapped FitzPatrick, Ginna and Nine Mile Point nuclear plants in upstate New York.
The plants are expected to receive about $450 million a year in the first two years of the program. Exelon owns the Ginna and Nine Mile plants and is buying the FitzPatrick plant from Entergy.
A group of merchant generators and their trade associations are challenging the Illinois and New York programs in court, in part by arguing that they intrude on the Federal Energy Regulatory Commission's jurisdiction over wholesale markets.