By John Stang
FirstEnergy Solutions formally confirmed to the Nuclear Regulatory Commission on Wednesday that it plans to permanently shut down three nuclear power plants unless it gets government help.
The three-paragraph message to the agency simply certifies FirstEnergy’s March 28 announcement that it would end power production at the Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, by May 31, 2020; the Perry Nuclear Power Plant in Perry, Ohio, by May 31, 2021; and the two reactors of the Beaver Valley Power Station in Shippingport, Pa., respectively by May 31, 2021, and Oct. 31, 2021.
“We are actively seeking policy solutions at the state and federal level as an alternative to retiring these plants, which we believe still have a crucial role to play in the reliability and resilience of our regional grid,” FES Generation Cos. President Don Moul said in a press release. “As early as mid-2019, we will begin facing decisions on each of these plants as to whether to refuel them or shut them down. Absent legislative or regulatory relief, we cannot continue to operate the plants on their current uneconomic basis.”
FirstEnergy Solutions — including its subsidiaries FirstEnergy Nuclear Generation and FirstEnergy Nuclear Operating Co. — filed for Chapter 11 bankruptcy protection on March 31. The Akron, Ohio, company, a subsidiary of FirstEnergy Corp., says its coal-fired and nuclear power plants have not been able to economically compete with cheaper power produced by natural gas operations.
The company has asked Energy Secretary Rick Perry to use his authority under the Federal Power Act to order regional power transmission provider PJM Interconnection to sign contracts that guarantee FirstEnergy’s nuclear and coal plants can fully recover their costs along with a return on their investments. The Energy Department has not yet ruled on the matter. PJM opposes the request because it believes it can obtain enough power from other sources.
The Energy Department this week did not respond to a request for an update on its deliberations.
Meanwhile, FirstEnergy Corp. has taken steps to financially shield itself from creditors of FirstEnergy Solutions. The company said Monday it has reached an “agreement in principle” with the majority of FirstEnergy Solutions’ creditors to settle all possible claims.
FirstEnergy said there are two groups of creditors involved, but otherwise did not say much about them. In a Monday conference call on the company’s latest earnings, FirstEnergy Corp. President and CEO Chuck Jones declined to reveal the number of creditors involved in the agreement in principle or their percentage of the total creditors.
The agreement confirms FirstEnergy would guarantee payment of certain FirstEnergy Solutions employee-related obligations. Meanwhile, the company would be shielded from debt owed to the majority of FirstEnergy Solutions’ creditors. Also, FirstEnergy is to give FirstEnergy Solutions publicly unspecified business-related financial help.
“This agreement is a key step in FES ultimately emerging from bankruptcy,” Jones told analysts.
FirstEnergy’s Board of Directors, the board of partner Allegheny Energy Supply, and the boards of FirstEnergy Solutions and its subsidiaries must vote to abide by this proposed agreement. Two groups representing most of the creditors, plus any remaining key creditors, along with the U.S. Bankruptcy Court, must approve the agreement. The deadline for all parties to agree is June 15.
During Monday’s conference call, Jones confirmed that should the agreement in principle be approved, FirstEnergy Corp. would not maintain liability connected with the closure costs for the three nuclear plants, including decommissioning and dry cask storage. Those would instead pass to the new owners.
The decommissioning cost for the reactors has been estimated at $2.1 billion.
One analyst asked about a potential sale of decommissioning activities, to which Jones said only “You would have to talk to the creditors and FES about that one.”
The discussion appeared to involve a deal similar to Entergy’s plan to sell its retired Vermont Yankee power plant to NorthStar Group Services. NorthStar would pay just $1,000 to buy Vermont Yankee, but would take on all responsibility for decommissioning and spent fuel storage at the site. It would keep some portion of the facility’s decommissioning trust fund once it completes that work.
FirstEnergy Solutions spokesman Tom Mulligan said Friday the company would not discuss details of the matter: “We’re not going to comment on possible deals with creditors, or on how the Chapter 11 might unfold in general. Neither are we going to get more specific about refueling beyond saying that those decisions will start to confront us in mid-2019.”
Jones, though, said FirstEnergy has not given up on keeping the plants operational. “We’re highly motivated to get support for these generator assets,” he told analysts. “I’m going to keep fighting for support of these plants because it’s the right thing to do.”
Two bills to allow FirstEnergy to increase electric rates to financially help the two Ohio reactors remain at the committee level in the state legislature. FirstEnergy has donated $149,000 this year to roughly a dozen Ohio legislative candidates, including $5,000 to Republican Rep. Larry Householder, who is eyeing the House speaker’s post, according to cleveland.com.
No legislation is in play in the Pennsylvania General Assembly.
Money-losing FirstEnergy Solutions’ bankruptcy filing removed it from FirstEnergy Corp.’s financial balance sheet, translating to the parent corporation posting first-quarter 2018 earnings of $1.2 billion ($2.55 per share) on $3 billion in revenue, according to a FirstEnergy press release and Monday’s conference call with analysts. in the first quarter of 2017, FirstEnergy earned $205 million on $2.9 billion in revenue.
