FirstEnergy utilities want to secure nuclear, coal capacity

Officials of FirstEnergy (NYSE: FE) provided Aug. 4 testimony filed with the Public Utilities Commission of Ohio to support a plan for three FirstEnergy regulated utilities to buy power from an unregulated nuclear plant and three unregulated coal plants.

Paul Harden, Senior Vice President, Fleet Engineering, for FirstEnergy Nuclear Operating Co. (FENOC), was one of those officials supporting a buy of power from the Davis-Besse nuclear plant, the Sammis coal plant, and parts of the Kyger Creek and Clifty Creek power plants.

“Because these Plants have an on-site fuel capability, they are available on a 24×7 basis and can support prolonged operations during disruptive events such as the January 2014 Polar Vortex,” Harden said. “Sammis targets an on-site fuel supply of approximately 30 days. Davis-Besse runs approximately two years between refueling outages, and can operate some time beyond that at a slightly reduced percentage of its rated power. Davis-Besse also targets having new fuel on site more than 30 days in advance of planned refueling outages. The operating characteristics of nuclear and coal plants make them essential to reliability in times of stress on the grid.”

Significant environmental investments have been made at Sammis, including a $426m air quality control system installed between 1980 and 1984, which was at the time the largest environmental retrofit in North America, and extensive retrofits in 2010. These environmental investments include:

  • Wet flue gas desulfurization (scrubbers) – In 2010, Sammis was retrofitted with a $1.8bn state-of-the-art air quality system. This includes WFGD, which were installed on all seven coal units and are designed to remove in excess of 95% of SO2. There are a total of three absorbers; two of these absorbers are used on Units 5 through 7 and the third absorber is used on Units 1-4;
  • NOx Control Systems – Units 6 and 7 were retrofitted with Selective Catalytic Reduction (SCRs) in 2010. The SCR process adds ammonia to the flue gas as it passes through a catalyst, and is designed to remove up to 90% of the NOx from the flue gas. The absorbers and SCRs were manufactured by B&W. Units 1-5 are equipped with Selective Non-Catalytic Reduction (SNCR) to control NOx by the injection of ammonia into the boiler to achieve approximately a 25% reduction in NOx; and
  • Particulate Collection Systems – Units 1 through 4 use “baghouse” technology to remove particulate matter, and Units 5 through 7 have electrostatic precipitators (ESPs). Collectively, this technology is designed to remove over 99.6% of the particulate matter in the flue gas.

Sammis is among the largest coal-fired power plants in Ohio. Its seven coal-fired units collectively produce 2,220 MW (2,130 MW PJM ICAP rating). Units 6 and 7 are designed to be baseload units rated at 1,200 MW in total, and Units 1-5 are load-following units rated at 1,020 MW in total. The plant uses an average of 18,000 tons of coal daily for an annual average of 6.6 million tons, including coal from Ohio mines.

FirstEnergy’s Ohio Edison, Cleveland Electric Illuminating and Toledo Edison have identified these sources of energy, capacity, ancillary services and environmental attributes to be purchased from FirstEnergy Solutions Corp. (FES) in a potential transaction supporting the PUCO-administered Economic Stability Program. These are Davis-Besse and W.H. Sammis. In addition, the companies would buy FES’s entitlement to output of Ohio Valley Electric Corp. (OVEC), which owns Kyger Creek and Clifty Creek.

Davis-Besse is a nuclear plant in northern Ohio along the shore of Lake Erie designed to be a baseload unit rated at 908 MW (894 MW PJM ICAP). Davis-Besse is owned by FirstEnergy Nuclear Generation LLC (FNG), a subsidiary of FES, and operated by FirstEnergy Nuclear Operating Co.

Davis-Besse’s operating license expires in April 2017. In August 2010, FENOC filed with the U.S. Nuclear Regulatory Commission a License Renewal Application, which is currently under review. The application requests renewal of Davis-Besse’s operating license for a period of 20 years.

“I have no reason to believe Davis-Besse’s operating license will not be approved for renewal,” Harden noted. “The replacement of the reactor pressure vessel head in 2011 and the replacement of steam generators earlier this year have enhanced the safe, efficient and reliable operation of Davis-Besse and will enable it to operate through a 20-year renewal of its operating license.”

OVEC operates the Kyger Creek Plant in Cheshire, Ohio, which has a baseload nameplate capacity of 1,086 MW. OVEC also operates the Clifty Creek Plant in Madison, Ind., which has a baseload nameplate capacity of 1,304 MW. OVEC and its owners operate under an Amended and Restated Inter-Company Power Agreement (ICPA) effective August 2011 and extending through June 30, 2040. Under the ICPA, FirstEnergy Generation LLC, an FES subsidiary, is entitled to power participation benefits and requirements equaling 4.85% of OVEC’s output, which based on OVEC’s nameplate capacity is 115.9 MW.

Jay Ruberto, Director, Regulated Generation and Dispatch, for FirstEnergy Service Co., said about the deal for the utilities to purchase this power: “The Companies would purchase from FES the capacity of the Plants and FES’s 4.85% entitlement in OVEC, together with the associated energy, ancillary services and environmental attributes. The delivery period would be from June 1, 2016 to May 31, 2031. For the Plants’ output, the Companies would pay all the costs of operating the plants, including fuel expenses, operations and maintenance (‘O&M’) expenses, depreciation and taxes, plus a reasonable return on invested capital. For purposes of the transaction, the parties would use a capital structure of 50% equity and 50% debt. For the OVEC entitlement interest, the Companies’ payment would be equal to those costs related to and deriving from FES’s 4.85% entitlement in OVEC.”

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.