FirstEnergy says West Virginia PSC conditions are workable

FirstEnergy Corp. (NYSE: FE) said Oct. 9 that it agrees to the conditions that the West Virginia Public Service Commission laid down in an Oct. 7 order approving the transfer of part of its Harrison coal plant to the regulated asset base of its Monongahela Power subsidiary.

This transaction will reduce an average residential customer’s bill by about $1.50 per month, FirstEnergy noted. It will also provide Mon Power with 100% ownership of the Harrison Power Station in Haywood, W.Va., and preserve the opportunity to use locally mined coal, sustaining employment and benefitting the regional economy.

Notable is that while FirstEnergy mentioned the “locally mined coal” angle for this northern West Virginia power plant, it had been permitting in 2012 with West Virginia regulators a new rail loadout that would allow it to bring in coal from outside the region. The main coal supplier for the plant is CONSOL Energy‘s (NYSE: CNX) Robinson Run longwall mine, with other coal trucked in from local suppliers like RFI Energy and also from Arch Coal (NYSE: ACI) from a former International Coal Group operation.

Mon Power and FirstEnergy’s Potomac Edison subsidiary, which has no power generation assets of its own, will also bring under this PSC order more jobs to the state, as well as provide financial contributions for economic development, weatherization programs and low-income assistance for paying utility bills.

Holly Kauffman, president of FirstEnergy’s West Virginia Operations, said in the Oct. 9 statement: “This has been a long and complex proceeding. We appreciate the support of the parties in negotiating a reasonable settlement, and are pleased that the Public Service Commission has allowed us to move forward with implementing our cost-effective plan to provide our customers with electricity generated in the heart of our West Virginia service territory.”

Mon Power needs this new coal capacity to replace shut coal capacity

Mon Power filed for this approval in November 2012 to address a looming generating capacity gap in part caused by the shutdown of some its other coal-fired capacity due to age and looming environmental regulations. Harrison has a full suite of emissions controls, including scrubber equipment added in the 1990s, so it is considered about as safe as any coal-fired capacity can be from near-term shutdown. This deal increases the net installed capacity of Mon Power by 1,476 MW.

In the fall of 2012, Mon Power shut its old Willow Island (243 MW), Rivesville (121 MW) and Albright (292 MW) coal plants in northern West Virginia due to slack power markets and a need for expensive new air emissions controls. That was part of an ongoing wave of FirstEnergy coal plant shutdowns in Ohio, Pennsylvania, West Virginia and Maryland.

Under the deal approved Oct. 7 by the West Virginia PSC, Mon Power would acquire the 79.46% interest currently held by FirstEnergy’s unregulated Allegheny Energy Supply Co. LLC in Harrison, resulting in Mon Power being the sole owner of Harrison. AE Supply would in turn acquire the 7.69% ownership interest held by Mon Power in the Pleasants coal plant, resulting in AE Supply being the sole owner of Pleasants.

Harrison is a 1,984-MW facility located in Haywood, W.Va. Unit 1 came on line in 1972 and has a capacity of 662 MW; Unit 2 came on line in 1973 and has a capacity of 661 MW; and Unit 3 came on line in 1974 and has a capacity of 661 MW. Mon Power currently owns 20.54% of Harrison’s capacity and would get the rest from AE Supply.

Pleasants is a 1,300-MW pulverized coal facility located in Willow Island, W.Va. Pleasants has two turbine generating units, each of which came on line in 1979 and has a capacity of 650 MW. Both units have SCR NOx controls and Wet FGD SO2 controls, and both use an ESP to control particulate matter. Up to now, Pleasants’ two units have been jointly owned by Mon Power (7.69%) and AE Supply (92.31%).

FirstEnergy at least at one point was looking at outside coals for Harrison

On that issue of outside coal for Harrison, the West Virginia Department of Environmental Protection was taking public comment last fall on an air permit change that would allow construction of a Rapid Discharge Railcar Unloading (RDRU) system capable of unloading a maximum of 3,000 tons of coal per hour and 5 million tons of coal per year. “This upgrade will increase the rate of unloading from 1,500 tons per hour to 3,000 tons per hour,” the agency said in an engineering evaluation report.

The DEP added: “Once complete, the RDRU will have the capability to deliver Powder River Basin coal and Illinois Basin bituminous coal to the plant. The system will incorporate a fogging system and enclosed conveyors to control particulate matter emissions.”

The DEP report added about the PRB and Illinois Basin coals: “Because these coals have different physical properties (mainly silt and moisture content) their emission profiles differ when estimating emissions from material handling. Therefore, [the company] estimated emissions that would result from using each coal exclusively. The permit will limit emissions according to the type of coal used with the caveat in no case shall maximum annual emissions exceed the amount estimated by the overall worst case scenario (PRB).” PRB coal is notoriously dusty, thus its status as the worst-case scenario.

The West Virginia Coal Association fully supported the Mon Power purchase of part of Harrison during the nearly year-long PSC proceeding, saying it would help ensure the plant’s future as a consumer of locally-mined coals. It is unclear where the project to add outside coals to the plant’s fuel mix stands.

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.