FirstEnergy could delay closing coal-fired power plants
State officials and labor leaders urged FirstEnergy Corp. to sell two local power plants it wants to close, but their plea got a cold response from the Ohio company during a hearing on Friday.
The chairman of the state Public Utility Commission and the local president of the Utility Workers Union of America questioned why FirstEnergy has not attempted to find buyers for the Hatfield's Ferry Power Station in Greene County and Mitchell Power Station in Washington County. The company plans to close the two plants on Oct. 9, in part because of the expense that would be needed to retrofit them to meet more stringent federal emissions standards.
“We do not understand why FirstEnergy is unwilling to investigate selling the plants,” Robert T. Whalen, president of the union's Local 102, told members of a legislative panel convened in Waynesburg by the Senate Consumer Protection and Professional Licensure Committee.
The hearing, which lasted for three hours, was intended to investigate the impact of the closings on consumers and about 380 workers.
“The company owes a better explanation to its employees, the local communities and to Pennsylvania's electric consumers,” said Robert F. Powelson, chairman of the PUC. Powelson left before FirstEnergy officials spoke.
FirstEnergy officials were resolute, saying they had no hope for an offer and no plans to change course. Their case got support from an official with the region's electric grid operator who said the plants are barely needed and won't cause any noticeable price spike when they close.
Some state officials and union members have been skeptical of the company's decision to close. FirstEnergy bought the larger, 1,710 megawatt Hatfield's Ferry as part of its $8.5 billion deal for Greensburg-based Allegheny Energy Inc. in February 2011. The plant had $650 million in environmental upgrades installed just two years before that deal.
The low price of gas coming from shale formations like the Marcellus has brought big change, crashing electricity prices and competing with coal, said Andy Ott, senior vice president at Valley Forge-based PJM Interconnection. Both plants are coal-fired and failed to make the cut in PJM's long-term sales auctions, officials said.
“We do not see a market power issue here,” Ott said after questions from state Rep. Pam Snyder, D-Jefferson, Greene County. “It does not seem like (FirstEnergy) is making an irrational decision.”
PJM has been in talks about delaying the closings to be sure the grid can get a steady electric supply throughout the region. That delay will probably be limited, Ott said. PJM's evaluation shows the grid needs the plants probably for only on a few days of peak summer demand, and even then at low capacity, he said.
It will finish its analysis in about two weeks. It is still looking for options to upgrade the transmission system so the plants may not need to stay open at all, he added.
“I was hoping to hear some better news from PJM than what they had for us,” said state Sen. Timothy Solobay, D-Canonsburg, who had requested the hearing.
Solobay was planning to meet in the afternoon with FirstEnergy CEO Anthony J. Alexander. He planned to ask Alexander about possibilities for selling the plant.
Though the company said it hasn't received offers, Whalen told the panel he knew of a prospective buyer. Whalen declined to publicly name the potential buyer, but told FirstEnergy officials after the meeting he would give them the information later in private.
The market right now is just too bad for coal-fired plants to even expect a buyer, company officials said. Hatfield's Ferry and Mitchell are two of about a dozen coal-fired plants the company is in the process of shutting down. Gas is too competitive and electric prices are too low for them to be profitable right now, FirstEnergy Generation President James H. Lash said. And tightening federal regulations make the market unappealing long-term.
Even trying to sell would not be worth it, said Charles D. Lasky, a vice president who oversees the company's fossil fuel fleet. Putting a plant on the market costs millions of dollars to hire consultants and solicit bids, he said after the meeting.
“It's an expensive process,” Lasky said. “And we don't believe there's going to be any significant interest.”
The buildings will be powered down and secured for the time being, and could be demolished and sold for scrap when those prices are right, Lasky said.
The company still is negotiating with the union about where to place its workers, he added. Many open spaces were filled by transfers from the last shutdowns, he said, and other spots could be eliminated during job cuts the CEO announced in his last earnings call.
“A lot of it made sense,” plant worker Gerard Grote, 59, of Menallen, Fayette County, said after the hearing. “I just can't believe they're going to walk away from a plant that runs so efficiently.”
Powelson said he's requested a meeting with Gina McCarthy, administrator of the Environmental Protection Agency. He wants to talk about environmental compliance options that could keep the plants open, he said.
Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or email@example.com.