FirstEnergy needs to clear up Seneca Nation tiff before selling hydro project

FirstEnergy (NYSE: FE) said Sept. 4 that some of its subsidiaries have applied for authorization from the Federal Energy Regulatory Commission to sell 11 hydroelectric power stations in Pennsylvania, Virginia and West Virginia to Harbor Hydro Holdings LLC, a subsidiary of LS Power Equity Partners II LP.

The sale agreement was reached on Aug. 23, and if approved, the transaction is expected to close in the fourth quarter of 2013. The agreement is subject to customary and other closing conditions, including from FERC, the Virginia State Corporation Commission and various other approvals.

The hydroelectric stations included in this proposed sale are owned by FirstEnergy Generation LLC, Allegheny Energy Supply Co. LLC and Green Valley Hydro LLC and have a total capacity of 527 MW, which represents less than 3% of FirstEnergy’s generation fleet output.

The sale includes:

  • Seneca Pumped Storage (451 MW) in Warren, Pa.;
  • Allegheny Lock & Dam 5 (6 MW) in Schenley, Pa.;
  • Allegheny Lock & Dam 6 (7 MW) in Ford City, Pa.;
  • Lake Lynn (52 MW) in Lake Lynn, Pa.;
  • Millville (3 MW) in Millville, W.Va.;
  • Dam 4 (2 MW) in Shepherdstown, W.Va.;
  • Dam 5 (1.2 MW) in Falling Waters, W.Va.;
  • Warren (750 kW) in Front Royal, Va.;
  • Luray (1.6 MW) in Luray, Va.; and
  • Shenandoah and Newport (860 kW and 1.4 MW, respectively) in Shenandoah, Va.

“Resolution of a potential competing license application and other claims related to the Seneca facility also is a condition to closing the proposed transaction,” FirstEnergy noted. That is a reference to a claim by the Seneca Nation, which owns the underlying property, that it should own the pumped storage facility. FirstEnergy and the Seneca Nation in July filed competing license renewal applications for the facility with FERC.

The 35 current employees at these power stations are expected to be retained by the new owner. FirstEnergy subsidiary Allegheny Generating Co. will continue to own 1,200 MW of the 3,000 MW Bath County Pumped-Storage Hydro facility in Warm Springs, Va. FirstEnergy subsidiary Jersey Central Power & Light (JCP&L) will continue to own 200 MW of the 400 MW Yards Creek Pumped-Storage Hydro facility in Blairstown, N.J.

FirstEnergy, which didn’t say why it is making this sale, operates one of the nation’s largest, cleanest and most diverse generating fleets, with 60% coal, 20% nuclear, 11% hydro and other renewables, and 9% gas/oil. Its 10 electric distribution companies form one of the nation’s largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Its generation subsidiaries currently control more than 20,000 MW of capacity from a diversified mix of scrubbed coal, non-emitting nuclear, natural gas, hydro, pumped-storage hydro and other renewables.

LS Power, an employee-owned, independent power company with offices in New York, New Jersey, Missouri and California, is a developer, owner, operator and investor in power generation and electric transmission infrastructure throughout the United States.

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.