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Saving FirstEnergy Power Plants Before Trump, FERC Again



By John Funk

March 9, 2018 - FirstEnergy's congressional supporters are pressing the Trump administration to intervene and save the company's coal and nuclear power plants -- even as the energy corporation talks of restructuring itself as a fully regulated power delivery company without competitive power plants.

The effort began a little over two weeks ago when some Ohio members of Congress sent letters to the president and to the Federal Energy Regulatory Commission.

The Plain Dealer has obtained copies of those letters, which while separate both argue that large old power plants cannot be allowed to disappear just because they cannot compete in today's competitive wholesale markets.

This time the argument is more than economics, jobs or fuel diversity which the coal industry and FirstEnergy relied on last fall when they convinced President Trump to ask the U.S. Department of Energy to invoke emergency powers to keep the old uncompetitive power plants operating, though ultimately without success. 

The new arguments for federal intervention are about national security. Also, one argument links the nation's current competitive edge in nuclear weapons to the health of its commercial atomic energy industry.

FirstEnergy insists it has not been involved in either of these new lobbying campaigns.

"We appreciate their efforts," said spokesman Todd Schneider. "We agree with the facts outlined in the letters. But we did not write either letter."

In fact, the congressional efforts have occurred as the company prepares for closing its power plants in Ohio and Pennsylvania or selling them off, probably in a bankruptcy proceeding, and becoming a delivery-only company with a predictable income. The company in January accepted $2.5 billion from hedge funds whose representatives now confer with FirstEnergy executives about restructuring. 

If successful, the two last-minute congressional efforts could help FirstEnergy by making its power plants more attractive to buyers by creating new funding for its three remaining large coal plants on the Ohio River and three nuclear plants, including Davis-Besse in Ottawa County and Perry in Lake County and Beaver Valley near Pittsburgh.

The argument that nuclear power plants are important to nuclear defense is one developed by four northern Ohio congressional members -- Democrats Marcy Kaptur of Toledo, Marcia Fudge of Warrensville Heights and Tim Ryan of Youngstown, along with Republican David Joyce of Bainbridge.

They laid out an outline of their thinking in a Feb. 15 letter to FERC.

"Our commercial nuclear energy industry and the United States' nuclear weapons complex complement each other...," they argued. 

"Without a commitment to nuclear power, nuclear technology development will decline and the nation's technical advantage in this sector will rapidly erode.

"We ask that you work with Ohio and other states with nuclear power facilities in financial distress to harmonize federal and state policies affecting the design of organized electricity markets," they wrote.

"We believe that these markets should appropriately value attributes including reliability, supply diversity, greenhouse gas omissions, and relative national security importance."

FERC has not yet responded to the letter.

Kaptur said she initiated the nuclear argument.

"I led this bipartisan letter with a deep concern for the potential job losses in our communities and because the nuclear industry is vital to national security," she wrote in an email in response to questions about her position. 

"These issues -- coupled with the emissions-free energy production the plants provide -- support America's nuclear capacity which is of critical importance to Ohio and our nation."

Rep. Marcia Fudge agreed with Kaptur's national security argument and also stressed jobs and the economic impact of large nuclear plants.

"Nuclear energy is not only a national security issue, but has economic implications for communities across the nation, including Ohio," she responded.  "I will always advocate for policies that support good-paying jobs for Ohioans, support America's energy independence, and promote cleaner energy options."

In an interview, Rep. Joyce, whose congressional district includes Lake County and the Perry plant, said FirstEnergy did not request the letter.

His interest in keeping the nuclear plants open is a collaborative effort among his congressional colleagues and his constituents, he said.

"The potential loss of revenue and jobs and the potential for economic development are the things that are important to me," he said.

Joyce was also one of 20 members of Congress, including six others from Ohio, who signed a Feb. 21  letter to President Trump urging him to direct Secretary of Energy Rick Perry to invoke emergency powers under the Federal Power Act in order to keep the old plants operating as vital to national security.

On the same day, Feb. 21,  Charles Jones, FirstEnergy's CEO, told Wall Street analysts during a public teleconference that he doubted the power plants would survive.

FirstEnergy's subsidiary, FirstEnergy Solutions, owns the plants and is widely expected to seek bankruptcy protection before major debt payments are due in April. The subsidiary has a bond rating of "likely to default."

"It is common knowledge that we were very actively involved in a multitude of efforts at both the state and federal levels, to support our generation assets in a way that would have benefited our communities, employees, and FES creditors," Jones told analysts.

"I am personally disappointed that these endeavors haven't resulted in any meaningful legislative or regulatory support, given the importance of these plants to grid resiliency, reliable and affordable power, and the region's economy."

The letter to the President was organized by U.S. Rep. Keith Rothfus, a Republican from suburban Pittsburgh about 35 miles from FirstEnergy's Beaver Valley nuclear power plant. His office had no immediate comment. 

Other members of Ohio's GOP congressional delegation on the letter were Warren Davidson of Miami County in southwest Ohio, Bob Gibbs of Holmes County, Bill Johnson of Marietta, Jim Jordan of Champaign County, Robert Latta of Bowling Green and Steve Stivers of the Columbus area.

Thirteen other members of Congress from Pennsylvania, Illinois, West Virginia Kentucky, Virginia and Indiana also signed the letter to the president. Senate Majority Leader Mitch McConnell and West Virginia's two U.S. senators were also signatories.

The letter re-hashed issues that last fall convinced the president to have Energy Secretary Perry ask the FERC to order managers of wholesale markets to find a way to subsidize the coal and nuclear plants unable to compete with gas turbines and wind. Customers would have seen higher rates to fund the subsidies had FERC not dismissed the idea.

The FERC tabled Perry's request in January and opened a new proceeding aimed at defining resiliency as well as developing new pricing mechanisms that do not ignore the stability that the old power plants may bring to the grid. Initial comments are due this week.

The essential argument then and now is that unlike modern ultra-efficient gas turbine plants, coal and nuclear plants have their fuel stored on-site, making them less vulnerable to fuel disruptions and therefore more "resilient," though not the least expensive.

"As a matter of both national and economic security, the electric grid must have the resiliency to respond to extreme circumstances," the February congressional letter argued.


The White House referred questions about the letter to the Department of Energy press office, which did not answer emails or a phone call seeking comment. - Your Foremost Source for Coal News