FirstEnergy (NYSE:FE) and American Municipal Power (AMP) won’t be going ahead with plans to develop a new 873-MW gas-fired plant at FirstEnergy’s Eastlake generating complex in Ohio.
FirstEnergy CEO Anthony (Tony) Alexander said during a May 7 earnings call that AMP has decided not to proceed. Roughly 30 minutes after FirstEnergy concluded its earnings call, AMP issued a news release on the project cancellation.
“It now appears unlikely it will proceed as a result of uncertainty regarding a number of issues, several of which could affect AMP’s financing for the project,” American Municipal Power said in the release. “As an example, the future of tax-exempt and tax-advantaged financing is in question and some of AMP’s projects have already seen increased interest costs because of the federal ‘sequester.’”
FirstEnergy and AMP said in November 2012 that they had entered into a non-binding memorandum of understanding (MOU) to build the gas-fueled facility on the grounds of FirstEnergy’s existing Eastlake plant.
A FirstEnergy spokesperson said the MOU just recently expired and AMP has decided not to go ahead with the plans for the peaking power plant. “It was really their decision that drove our decision,” the FE spokesperson said.
“This project has a lot of positives and some challenges, but the financial uncertainty today, on top of continued regulatory uncertainty heavily impacted AMP’s decision,” said AMP President and CEO Marc Gerken.
FirstEnergy’s Alexander said cancellation of the project would affect FE’s upcoming market activity.
Under the MOU, FirstEnergy would have supervised construction of the four combustion turbine units. AMP woudl have provided the construction financing and owned 75% of the generation output upon completion, while FirstEnergy would have funded and owned the remaining 25% of the output in 2016.
FirstEnergy sells hydro assets, refuels Perry nuclear unit
Meanwhile, FirstEnergy hopes to complete the sale of 1,240 MW of non-utility hydroelectric capacity in the second half of 2012. An FE spokesperson said the hydro assets are located in FirstEnergy’s eastern territory, with much of the capacity in Pennsylvania.
In other generation news, on March 18 the Perry nuclear plant safely shut down for scheduled refueling, maintenance and a turbine upgrade expected to improve efficiency and reliability. During the outage, Perry’s three low pressure turbines will be replaced with new, 175-ton turbine rotors that feature an enhanced blade design.
FirstEnergy also said it has lined up an additional year, until 2016, to bring certain of its coal units into compliance with the Mercury and Air Toxics Standards (MATS).
On April 23, the Federal Energy Regulatory Commission (FERC) issued an order authorizing the generation asset transfer proposed by the Monongahela Power (MP) and Potomac Edison (PE) utilities in West Virginia. MP’s application to FERC for authorization of financing related to these transfers is pending.
Cooler weather in the first quarter of 2013 compared to the same period last year resulted in a 3% increase in total distribution deliveries. Residential sales increased 6%, while commercial and industrial deliveries increased slightly.
FirstEnergy announced first quarter 2013 basic and diluted earnings of 76 cents per share of common stock on a non-GAAP basis. This compares to basic and diluted non-GAAP earnings of 82 cents per share of common stock in the first quarter of 2012.