FirstEnergy, AMP still working on Eastlake peaking unit

FirstEnergy (NYSE: FE) continues to work with American Municipal Power (AMP) to develop a new peaking unit at the Eastlake station, company officials said Feb. 25.

FirstEnergy CEO Anthony (Tony) Alexander pointed to planning on the peaking project during the company’s regular quarterly earnings conference call with financial analysts.

During the call, Alexander and other FirstEnergy officials talked about Eastlake, an ongoing coal plant transfer, a plan to divest certain hydroelectric assets and continued efforts to reduce coal plant emissions.

FirstEnergy is also making various equipment upgrades at some of its nuclear power reactors.

On Nov. 5, 2012, FirstEnergy and Ohio-based AMP entered into a non-binding memorandum of understanding (MOU) to site, build and operate a natural gas peaking facility located on the grounds of FirstEnergy’s existing plant in Eastlake, Ohio.

The proposed project still needs regulatory approval. As part of the non-binding MOU, FirstEnergy would supervise construction of the four combustion turbine units that are capable of producing 873 MW.

AMP will provide the construction financing and own 75% of the generation output, while FirstEnergy will fund and own the remaining 25% of the output, upon completion. Plans call for the facility to be operational in early 2016.   

FirstEnergy continues to transfer the coal-fired Harrison coal plant in West Virginia to its Mon Power subsidiary. Mon Power already owns 20% of the project.

The West Virginia Coal Association and other entities have endorsed the move. West Virginia state regulatory proceedings are scheduled this spring, company officials said.

On Nov. 16, 2012, Mon Power and Potomac Edison filed a proposal with the West Virginia Public Service Commission to transfer full ownership of the Harrison station to Mon Power and full ownership of the Pleasants Power Station to Allegheny Energy Supply.

This two-part transaction, if approved as filed, is expected to provide AE Supply with approximately $1.1bn of cash which would be used to redeem FirstEnergy Solutions AE Supply debt.

“In 2012, we successfully controlled costs, improved our operational performance, and continued building our competitive business, consistent with our strategies,” said FirstEnergy’s Alexander. “This year, we will remain focused on continuing the strong operational performance in our three core businesses, generation, transmission and distribution, while delivering financial stability and pursuing opportunities for growth.”

Nuclear has better quarter, growth seen at FE Solutions

Fossil generation output decreased by 1.5 million MWH, primarily resulting from lower output associated with the deactivated units, reliability must run (RMR) units designated by PJM, and temporary operational changes at the Sammis plant.

Nuclear output increased by 1.3 million MWH, primarily due to a 32-day refueling outage at Beaver Valley Unit 2 in the fourth quarter of 2012 compared with a 66-day mid-cycle outage at Davis-Besse and a 17-day forced outage at Perry in the fourth quarter of 2011.

Some nuclear units could see turbine replacements in the near term, FirstEnergy officials said.

FirstEnergy has 10 utilities serving six million customers a contiguous six-state region. FirstEnergy Solutions has a regional asset-backed retail strategy.

Competitive Energy Services’ (CES) contract generation sales increased by 2.2 million MWH, or 10%, and increased earnings by $0.07 per share.

FirstEnergy has said that after the planned deactivation of older, dirtier coal plants, nearly 100% of its power generation will come from “low or non-emitting sources.”

The company has also said that it expects to spend $975m over the next several years to ensure fossil units comply with the new EPA MATS regulations.

 The company’s Sammis coal plant resumed operations in late November.

In late October 2012, FirstEnergy subsidiaries experienced unprecedented damage in their respective service territories, primarily as a result of Hurricane Sandy.

The company’s competitive subsidiary, FirstEnergy Solutions, expanded its retail customer count by 42% in the year, growing from approximately 1.9 million customers at the end of 2011 to nearly 2.6 million at the end of 2012.  FirstEnergy Solutions also grew direct retail sales by 18% in the year. In the fourth quarter, sales margins benefited from the execution of the company’s retail strategy, but these gains were offset by a decrease in capacity revenues due to lower capacity prices.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.