By John Stang
FirstEnergy Nuclear Operating Corp. and FirstEnergy Solutions were due to submit a request today to the U.S. Nuclear Commission to transfer to their creditors the licenses to three nuclear power plants earmarked for closure in coming years.
The two sister corporations, subsidiaries of FirstEnergy Corp. now going through Chapter 11 bankruptcy, hope to obtain NRC approval in about six months and to complete the transfers shortly afterward, spokeswoman Angela Pruitt in an email.
There was no immediate word on the purpose of the license transfers or the identity of the specific creditors that would receive them.
FirstEnergy Solutions (FES) and FirstEnergy Nuclear Operating Co. (FENOC) filed for Chapter 11 bankruptcy in March 2018, just day after announcing the planned closures of four commercial reactors in Ohio and Pennsylvania. The bankruptcy proceeding does not cover parent company FirstEnergy Corp.
In Ohio, the Davis-Besse Nuclear Power Station in Oak Harbor is set to close in May 2020, followed by the Perry Nuclear Power Plant in Perry in May 2021. In Pennsylvania, the two reactors at the Beaver Valley plant are due to close in May and October 2021. FirstEnergy Solutions says the facilities cannot economically compete with low natural gas prices and other market forces.
On April 4, U.S. Bankruptcy Court Judge Alan Koschik ruled that the FES and FENOC bankruptcy reorganization plan was too vague and lets FirstEnergy Corp. off the hook for cleanup costs of the four reactors if its subsidiaries fall short. The proposed reorganization called for separating FES and FENOC from FirstEnergy Corp, which included shielding the parent corporation legally and financially from many of the bankrupt subsidiaries’ creditors.
On April 18, FES and FENOC submitted a revised reorganization plan to Koschik that they hope will alleviate the judge’s concerns about the possibility of debts going unpaid.
“I think the nuclear license transfer is probably on the critical path,” FirstEnergy Corp. President and CEO Chuck Jones said Wednesday during the company’s quarterly earnings conference call. “Now that we’ve kind of moved forward beyond the court ruling I believe, with regard to these nonconsensual third party releases. Let me just comment on that a little bit more. I would say that, that caught us by surprise with the focus of the court being solely on the releases and not on the actual settlement, because we believed in the actual settlement that we have provided substantial value to make sure that FES can emerge, operate these assets and deal with any retirement obligations when those come down the road.”
Pruitt reaffirmed that FirstEnergy Solutions has not closed the door on keeping the plants open. “[S]hould a legislative solution or meaning market reforms emerge to keep our nuclear plans operational, we would address such a scenario at the time, based on the status of the license transfer and the NRC review,” she wrote.
FirstEnergy has sought assistance from federal and state governments to sustain the Ohio and Pennsylvania operations. State legislation has been filed this year in Ohio and Pennsylvania to help prop up all three plants.
Pruitt said FirstEnergy “has no updates to share at this time” on a mid-2018 request to Energy Secretary Rick Perry to order a regional power clearinghouse to financially bolster FirstEnergy Solutions enough to keep its reactors and other power plants online. The FirstEnergy wants the clearinghouse — 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. So far, nothing has publicly emerged from the Department of Energy.
Pruitt said the license transfer to creditors does not involve Holtec International and NorthStar Group Services, companies that in recent years have sought to acquire retiring nuclear power plants for decommissioning. In each case, the new owner would obtain the trust that funds decommissioning of the reactors.
An unknown factor is whether the creditors would choose to move the facilities quickly into decommissioning or choose the delayed SAFSTOR approach under which final cleanup is not required for up to 60 years.
A March 15 FENOC filing with the NRC said the company is on track to have sufficient balances in its separate trusts to cover the cost of decommissioning each reactor under SAFSTOR.
The trust fund breakdown, as of Dec. 31, 2018, is:
- $517.1 million for Perry, with a $1.6 billion preliminary project estimate for license termination, site restoration, and spent fuel management;
- $562.9 million for Davis-Besse, with a $1.1 billion preliminary project estimate for license termination, site restoration, and spent fuel management;
- $286.9 million for Beaver Valley No. 1, with a $969.9 million preliminary estimate for license termination, site restoration, and spent fuel management; and
- $383.2 million Beaver Valley No. 2, with a $999.4 million preliminary project estimate for license termination, site restoration, and spent fuel management.
FirstEnergy Corp. said this week it is optimistic about limiting the impact of the bankruptcy of its subsidiaries on the parent corporation’s financial picture, according to slides presented during the company’s latest earnings presentation.
During the earnings call, Jones said the corporations are working diligently with creditors and other parties to ensure all debts are paid.
FirstEnergy Corp. announced revenue of $2.9 billion for the first quarter of 2019, compared to $2.9 billion for the same time in 2018. That translated to $315 million in earnings, or $0.59 per basic share, in the latest quarter, compared to $1.2 billion in earnings, or $2.55 per basic share, in the same period of 2018. The drop in earnings was due to ripple effects from FirstEnergy Solutions’ bankruptcy and efforts to separate it and FENOC from FirstEnergy Corp., according to a Tuesday press release.
