FirstEnergy (NYSE: FE) has gotten or is currently seeking one-year extensions of the April 2015 compliance deadline under the federal Mercury and Air Toxics Standards (MATS) for various coal-fired power plants.
MATS imposes emission limits for mercury, particulate matter (PM), and HCL for all existing and new coal-fired generating units effective in April 2015 with averaging of emissions from multiple units located at a single plant, FirstEnergy noted in its Feb. 17 annual Form 10-K report. Under the Clean Air Act, state permitting authorities can grant an additional compliance year through April 2016, as needed, including instances when necessary to maintain reliability where electric generating units are being closed.
- In December 2012, the West Virginia Department of Environmental Protection granted a conditional extension through April 16, 2016, for MATS compliance at the Fort Martin, Harrison and Pleasants coal stations.
- In March 2013, the Pennsylvania Department of Environmental Protection granted an extension through April 16, 2016, for MATS compliance at the Hatfield’s Ferry and Bruce Mansfield coal stations.
- In December 2014, FirstEnergy Generation requested an extension through April 16, 2016, for MATS compliance at the Bay Shore and Sammis coal stations and is awaiting a decision from the Ohio Environmental Protection Agency.
MATS was challenged in the U.S. Court of Appeals for the D.C. Circuit by various entities, including FirstEnergy’s challenge of the PM emission limit imposed on petroleum coke boilers, such as Bay Shore Unit 1. In April 2014, MATS was upheld by the appeals court, however, the court refused to decide FirstEnergy’s challenge of the PM emission limit imposed on petroleum coke boilers due to a January 2013 petition for reconsideration still pending but not addressed by EPA. In November 2014, the U.S. Supreme Court agreed to review MATS, specifically, to determine if EPA should have evaluated the cost of MATS prior to regulating.
Depending on the outcome of the U.S. Supreme Court review and how the MATS are ultimately implemented, FirstEnergy’s total capital cost for compliance (over the 2012-2018 period) is currently expected to be approximately $370 million, of which $133 million has been spent through 2014.
As of September 2012, Albright, Armstrong, Bay Shore Units 2-4, Eastlake Units 4-5, R. Paul Smith, Rivesville and Willow Island were deactivated. FirstEnergy Generation entered into reliability-must-run (RMR) arrangements with PJM Interconnection for Eastlake Units 1-3, Ashtabula Unit 5 and Lake Shore Unit 18 through the spring of 2015, when they are scheduled to be deactivated. In February 2014, PJM notified FirstEnergy Generation that Eastlake Units 1-3 and Lake Shore Unit 18 will be released from RMR status as of Sept. 15, 2014. It intends to operate the plants through April 2015, subject to market conditions. As of October 2013, the Hatfield’s Ferry and Mitchell stations in Pennsylvania were also deactivated.
FirstEnergy currently has long-term coal contracts with various terms to acquire approximately 25.4 million tons of coal for the year 2015 which is approximately 100% of its estimated 2015 coal requirements. This contract coal is produced primarily from mines in Ohio, Pennsylvania, West Virginia, Montana and Wyoming. The contracts expire at various times through Dec. 31, 2030.