FirstEnergy Service Co., on behalf of affiliate FirstEnergy Solutions Corp., on July 11 submitted a petition for limited waiver at the Federal Energy Regulatory Commission related to a plan this fall to idle the coal-fired Mitchell and Hatfield’s Ferry power plants.
The petition seeks limited waiver of the deadlines contained in Section 6.6(g) of Attachment DD of the PJM Interconnection Open Access Transmission Tariff with respect to Hatfield’s Ferry Units 1-3 and Mitchell Units 2-3.
“The requested limited waiver reflects FirstEnergy’s recent announcement that the Units would be deactivated by October 9, 2013, and as such is necessary to allow PJM and the Market Monitoring Unit (the ‘MMU’) to process FirstEnergy’s requests for exceptions to the must-offer requirement for the Units for the First Incremental Auction for Delivery Year 2015-2016,” the companies told FERC. “FirstEnergy requests that the Commission grant this petition by August 23, 2013, in order for FirstEnergy to take the steps necessary to properly reflect the status of the Units in the First Incremental Auction beginning on September 9, 2013. FirstEnergy is authorized to represent that neither PJM nor the MMU opposes its request, as detailed herein.”
The parent of these companies, FirstEnergy (NYSE: FE), is one of the nation’s largest investor- owned electric utilities with a generating fleet of over 20,000 MW. FirstEnergy Solutions offers the generation owned or controlled by itself and its affiliates, including Allegheny Energy Supply LLC, into the wholesale markets operated by PJM, such as the Reliability Pricing Model (RPM).
Allegheny Energy Supply owns the Hatfield’s Ferry station, which consists of three coal-fired units with a rated net demonstrated capacity of 570 MW each. The Hatfield’s Ferry station is located in Masontown, Pa. Allegheny Energy Supply also owns the Mitchell station, which consists of one oil-fired unit with a rated net demonstrated capacity of 82 MW and one coal-fired unit with a rated net demonstrated capacity of 288 MW. The Mitchell station is located in Courtney, Pa.
These units require additional environmental controls to comply with the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS), which is a big reason why they are being shut.
“FirstEnergy submits that good cause exists to grant a waiver of the must-offer exception request deadline in this instance,” the filing said. “The Units have been on the edge of financial viability due to low energy prices and the significant capital costs that are necessary to comply with the MATs final rule. PJM posted of the results for the Base Residual Auction (“BRA”) for 2016-2017 Delivery Year on May 24, 2013. Once those results were posted, FirstEnergy refreshed the economics of the Units and determined that further investment in the Units was not warranted in light of persistently low energy revenues and the upcoming MATs compliance costs.”
The filing added: “Having determined that further investment was not warranted, FirstEnergy then began to identify all of the issues – such as addressing labor and corporate securities requirements – that would apply and have to be addressed as a consequence of that decision. Once all of these issues were identified and addressed, FirstEnergy was in a position to determine whether to deactivate the Units and, by notice dated July 9, 2013, advised PJM of the decision to deactivate the Units. FirstEnergy’s timing in submitting the must-offer exception requests and notices of Deactivation was due to the need to incorporate the results of the 2016/2017 BRA into its analysis of the economic viability of the Units, and the fact that the results of that auction were only available on May 24, 2013, after the deadline for the must-offer exception request had passed. FirstEnergy acted diligently and in good faith to promptly request an exception from the must-offer requirement once the decisions to deactivate were made.”
The idling of these plants will mean a loss for Northern Appalachia coal markets. U.S. Energy Information Administration data shows Mitchell getting coal earlier this year from suppliers like Amerikohl Mining, MEPCO Operations and USNR Energy Services. Suppliers to Hatfield’s Ferry included Amerikohl, CONSOL Energy‘s McElroy longwall mine and Alliance Coal‘s relatively new Tunnel Ridge longwall mine.