FirstEnergy Corp. will sell or deactivate 856 MW of coal-fired generation to reduce fleet operating costs.
The company announced on July 22 that it plans to sell or deactivate the 136-MW Bay Shore Unit 1 in Oregon, Ohio, by October 2020. In addition, Units 1–4 (totaling 720 MW of capacity) at the company’s seven-unit W.H. Sammis Plant in Stratton, Ohio, will be retired in May 2020.
FirstEnergy currently has 5,167 MW of generation capacity in Ohio, and the deactivations in 2020 will cull that capacity to 4,311 MW. The deactivations, however, are subject to review for reliability impacts by PJM Interconnection. FirstEnergy said it does not intend to offer these units into the PJM capacity auction for the 2020–2021 timeframe.
No job reductions are expected at either plant. “FirstEnergy will work with any potential buyer to discuss continued employment for the 78 employees at Bay Shore, or if the plant is deactivated, provide employees with job opportunities at other FirstEnergy facilities. There are 368 employees at Sammis,” it said.
Bay Shore Unit 1 made history when it came online in 2000 as the world’s biggest fluidized-bed combustion boiler. The boiler is fueled by petroleum coke, a byproduct of the refining process, and Bay Shore provides steam to a nearby refinery for its operations. Bay Shore Units 2, 3, and 4 were deactivated in 2012 owing to high costs of compliance with the Environmental Protection Agency’s Mercury and Air Toxics Standards rule.
On the other hand, W.H. Sammis is FirstEnergy’s largest coal-fired power plant in Ohio. The company expects Units 5–7 to continue to provide 1,490 MW of baseload generation. Units 1, 2, 3, and 4, each with a capacity of 180 MW came online between 1959 and 1962. FirstEnergy completed a $1.8 billion emissions control project at Sammis only six years ago to help improve air quality and comply with current regulations.
“We have taken a number of steps in recent years to reduce operating costs of our generation fleet,” said FirstEnergy Generation President Jim Lash. “However, continued challenging market conditions have made it increasingly difficult for smaller units like Bay Shore and Sammis Units 1–4 to be competitive. It’s no longer economically viable to operate these facilities.”
The Federal Energy Regulatory Commission (FERC) on April 27 blocked power purchase agreements that would have supported continued operation of FirstEnergy’s Davis-Besse nuclear plant and the Sammis coal plant, as well as other plants in Ohio owned by American Electric Power (AEP), though the Public Utilities Commission of Ohio (PUCO) had blessed the deal just a month before.
As POWER reported, the company claimed that the agreements were critical to keep the plants operating to ensure reliability. But consumer groups fought the deals, which guaranteed above-market rates for eight years, suggesting that they amounted to “corporate welfare.”
Just days after FERC’s decision, FirstEnergy on May 2 asked PUCO to consider a revised rate plan that scraps the controversial power purchase agreements, but calls instead for monthly surcharges based on estimated power production costs as outlined in a proposal that the company filed with PUCO in August 2014.
AEP, meanwhile, has suggested that it may lobby for re-regulating Ohio’s energy market or sell the rest of its Ohio plants.
On July 18, Dayton Power and Light Co., a subsidiary of AES Corp., also filed a proposal with PUCO calling for a “reliable electricity rider” that would keep 2 GW of the company’s economically embattled coal plants online.
FirstEnergy spokesperson Jennifer Young told POWER on July 22 that the decision to deactivate the units does not impact the revised rate case. “Bay Shore Unit 1 and Sammis units 1–4 are older, smaller units that simply don’t compete in today’s marketplace,” she said.
At the same time, it doesn’t affect operations at the struggling Davis-Besse nuclear unit. While the company’s Davis-Besse nuclear plant “continues to face pressures from challenging market conditions,” the company “is focused on running the facility as efficiently as possible to maintain cash flow positive operations,” Young added.
She noted that the nuclear unit supports fuel diversity, which is “a longstanding utility practice for keeping electricity prices stable as fuel costs fluctuate, while emitting zero carbon emissions.” FirstEnergy has made significant investments in recent years and received a license extension through 2037 from the Nuclear Regulatory Commission in December 2015 for the unit, she said.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)