Exelon selling off coal capacity, shutting other fossil units

Exelon Corp. (NYSE: EXC) is continuing to reduce its stake in the coal-fired power business with recent deals to sell coal-fired capacity in Maryland and elsewhere, plus it now plans to shut some other fossil capacity in Pennsylvania and Maryland.

In its Nov. 1 earnings report for the third quarter, Exelon said about power plant divestments.

Maryland Clean Coal Asset Divestitures:

On Aug. 8, Exelon reached an agreement to sell its three Maryland coal-fired power plants to Raven Power Holdings LLC, fulfilling its commitment to the state of Maryland to divest the plants as part of its merger with Constellation Energy. The sale was required by the Federal Energy Regulatory Commission (FERC), U.S. Department of Justice (DOJ) and the Maryland Public Service Commission as part of Exelon’s merger approval. The three plants, known collectively as Maryland Clean Coal, include:

  • Brandon Shores (coal) in Pasadena, Md., 1,273 MW of installed capacity, two units;
  • C.P. Crane (coal and oil) in Middle River, Md., 399 MW installed capacity, three units; and
  • H.A. Wagner (coal, natural gas and oil) in Pasadena, Md., 976 MW installed capacity, five units.

Exelon’s Generation segment expects to receive proceeds of about $388m in the fourth quarter less cash payments of around $32m to Raven Power Holdings over a twelve-month period beginning in June 2014. Generation expects to incur transaction costs of approximately $20m through the closing of the transaction in the fourth quarter. The sale will generate about $225m of cash tax benefits, of which $135m will be realized in periods through 2013 with the balance to be received in later years. Therefore, Generation expects net after-tax cash sale proceeds of about $500m through 2013 and approximately $65m in 2014 and subsequent years. Exelon recorded a pre-tax loss of $278m in the third quarter to reflect the difference between the estimated sale price and the carrying value of the plants. All regulatory preconditions to closing this transaction have been met and required FERC authorizations have been received.

Qualified Facility Sales:

On Aug. 21, Exelon closed on the sale of its ownership share of five California power plants – a total of 70 MW of generating capacity – to Tokyo-based IHI Corp. The power plants joined Exelon’s generating portfolio following the company’s merger with Constellation in March 2012. The five California power plants include:

  • Chinese Station (biomass) in Jamestown, in which Exelon owned a 9.9 MW share;
  • Rio Bravo Fresno (biomass) in Fresno, in which Exelon owned a 12 MW share;
  • Rio Bravo Jasmin (coal) in Bakersfield, in which Exelon owned a 17.5 MW share;
  • Rio Bravo Poso (coal) in Bakersfield, in which Exelon owned a 17.5 MW share; and
  • Rio Bravo Rocklin (biomass) in Lincoln, in which Exelon owned a 12 MW share.

Riverside 6 and Schuylkill 1 Retirements:

On Oct. 31, Exelon Generation notified PJM Interconnection of its intention to permanently retire Schuylkill Generating Station Unit 1 by Feb. 1, 2013, and Riverside Generating Station Unit 6 by Jun. 1, 2014. Schuylkill Unit 1 is a 166-MW peaking oil unit located in Philadelphia, Pa., which was placed in service in 1958. Riverside 6 is a 115-MW peaking gas/kerosene unit located in Baltimore, Md., which was placed in service in 1970.

The units are being retired because they are no longer economic to operate due to their age, relatively high capital and operating costs and current market conditions. PJM has 30 days to review whether the proposed retirements of the units create transmission system reliability issues, Exelon noted. Once PJM’s review is complete, Exelon will determine final retirement dates for the units.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.