FirstEnergy (NYSE:FE) subsidiary Monongahela Power announced Nov. 11 that it has initiated a review of its ownership stake in the Bath County Pumped Storage Project located in Warm Springs, Virginia.
The review is driven by recent changes in the PJM Interconnection capacity market, which in the future are expected to reduce sharply Mon Power’s capacity revenues from the facility. There is no assurance that this review by Mon Power will result in any alternatives being announced or consummated.
Mon Power has an indirect 487-MW ownership interest in the pumped storage hydroelectric station, which consists of two large reservoirs and a powerhouse interconnected by tunnels. Virginia Electric and Power, a subsidiary of Dominion Resources (NYSE:D) is the majority owner of the station and manages its operation. The entire Bath pumped storage plant includes multiple units and has a total generating capacity of more than 2,800 MW.
PJM’s new capacity rule reduces the value of pumped storage generation stations because they cannot produce electricity continuously during all hours of the day. Under the new rules, Bath’s capacity revenues for Mon Power will be reduced by about half, FirstEnergy said.
FirstEnergy recently indicated that it would probably exit merchant generation within 18 months.
PJM is the regional transmission operator that operates a competitive wholesale electricity market and manages the electric transmission grid in all or parts of 13 states and the District of Columbia.
Mon Power supplies electricity to both its 385,500 customers and 137,000 Potomac Edison customers.