FirstEnergy to Shutter Four Uneconomic Nuclear Units by 2021

FirstEnergy Corp. will close four uneconomic nuclear units—a total of 4 GW—in Ohio and Pennsylvania between 2020 and 2021, the company’s competitive arm notified PJM Interconnection on March 28.

FirstEnergy Solutions (FES) told the regional transmission organization that it will close the 908-MW Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, by 2020; the twin-unit 1,872-MW Beaver Valley Power Station in Shippingport, Pennsylvania, in 2021; and the Perry Nuclear Power Plant in Perry, Ohio, in 2021. The closures are subject to review by PJM for reliability impacts. FirstEnergy has also notified the Nuclear Regulatory Commission (NRC), the Institute of Nuclear Power Operations, and the Nuclear Energy Institute.

“The two-year-plus lead time is needed to make the complex preparations for a potential plant deactivation, including preparing a detailed decommissioning plan and working with the NRC to amend plant licenses,” the company said in a statement e-mailed to POWER on March 29.

In the interim, the plants are expected to continue normal operations as FES seeks legislative policy solutions as well as seeks potential buyers as another alternative, it said.

A Cry for Help

According to Don Moul, president of FES Generation Companies and chief nuclear officer, “Though the plants have taken aggressive measures to cut costs, the market challenges facing these units are beyond their control.”

The decision to deactivate the facilities “is very difficult and in no way a reflection on the dedicated, hard-working employees who operate the plants safely and reliably or on the local communities and union leaders who have advocated passionately on their behalf,” he added.

Moul called on elected officials in Ohio and Pennsylvania to consider policy solutions to recognize the importance of the plants and their 2,300 employees. “We stand ready to roll-up our sleeves and work with policy makers to find solutions that will make it feasible to continue to operate these plants in the future,” he said.

A Competitive Market Exit

The nuclear units provided about 65% of FES’s generating fleet production in 2017. FES has faced stiff financial headwinds exacerbated by market volatility. The merchant generator is inching closer to its April 2 deadline to repay $98.9 million in senior unsecured bond maturity. Industry observers expect that the company is likely to default on the payment.

Meanwhile, Akron, Ohio–based FirstEnergy, which suffered steep losses in 2017, has sought an exit from competitive markets. In January, as the company received a $2.5 billion equity injection from four private investment groups to boost its transition to a fully regulated utility company, it agreed to form a restructuring working group to maximize value and certainty, and “minimize the timing” to exit competitive generation.

FirstEnergy on Wednesday said that a strategic review of FES’s two remaining coal plants and one natural gas plant, totaling 5,245 MW, will continue as part of plans to exit competitive generation due to weak power prices, insufficient results from capacity auctions, and weak demand forecasts.

 

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)