AEP, FirstEnergy shutdowns involve coal units ‘thought safe’

The recently-announced power plant retirements by American Electric Power (NYSE: AEP) and FirstEnergy (NYSE: FE) were troubling for the coal sector because they involved units “once thought safe,” UBS Investment Research Analyst Julien Dumoulin-Smith said recently.

FirstEnergy’s 1,700-MW ‘supercritical’ Hatfield’s Ferry plant in Pennsylvania is already scrubbed, so it would have involved a “modest” capital expenditure to meet new air emissions needs, Dumoulin-Smith said in a July 15 assessment. That plant, when fully operating, burns about 4 million tons of coal per year.

AEP’s Muskingum River Unit 5 in Ohio had been contemplated for conversion to gas, but the unit failed to clear its $180/MWday bid in a recent auction.

While Muskingum River’s capacity factor had declined to 14% in 2013 from roughly 53% in 2011, Hatfield’s Ferry has remained around 60% of late, according to the UBS analysis.

In other power generation developments, last week Energy Future Holdings (EFH) subsidiary Luminant announced that it would again seasonally mothball 1,070 MW of coal capacity at its Monticello Units 1 and 2 in Texas, citing low power revenues during off-peak months. The units will be brought back online for next summer, Dumoulin-Smith said.

Separately, AES also filed notice to again seasonally mothball its Deepwater plant (138 MW) in Texas. AES Deepwater is fired with petroleum coke.

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.