Public Service Enterprise Group (NYSE:PEG) (PSEG) Chairman, President and CEO Ralph Izzo on Oct. 31 discussed the recently-announced plans to retire the Hudson and Mercer coal units in New Jersey that together generate 1,250 MW.
The financial outlook for the two facilities is worse now than it appeared just a few years ago, Izzo said in a quarterly earnings conference call with financial analysts.
“It would be uneconomic” for PSEG Power to invest to invest enough money in these plants to comply with PJM capacity assurance standards, Izzo said. Retirement of the plants is scheduled for mid-2017.
Early retirement of the Hudson and Mercer generating stations in June 2017 resulted in one-time charges in the third quarter of $67m (after-tax) covering impairments and closing costs; remaining capital cost will be depreciated from Q4 2016 through first-half 2017, officials said.
During the first nine months of 2016, PSEG Power’s coal facilities had a capacity factor of less than 4%, according to PSEG financial materials. By contrast, system-wide nuclear capacity was 87.5% for the first nine months of 2016.
PSEG’s combined-cycle natural gas capacity factor was 74% for the third quarter, compared to 63% for the same period in 2015, according to the company slides.
Nuclear and natural gas are increasingly providing the bulk of PSEG’s electric generation, Izzo noted.
PSEG returned the Salem nuclear units in late July following refueling and baffle bolt repairs at Unit 1 and transformer issues at Unit 2. The refueling at Hope Creek nuclear facility is currently underway, officials noted during the call.
PSEG Power’s construction of Keys/Sewaren/Bridgeport Harbor combined-cycle natural gas plants continue on schedule and on budget, Izzo said.
PSEG Power generation met demand of the hottest summer weather in 37 years of data, Izzo said.