FirstEnergy mum on fate of two old Ohio power plants in regional auction
CLEVELAND, Ohio — FirstEnergy would not discuss the fate of its power plants Tuesday night in the annual 13-state auction that grid manager PJM held to identify the most economic power plants that will still be operating in 2019.
A flock of new gas-fired power plants jumped into the PJM competition this year, adding more than 5,000 megawatts of new power — stiff competition for aging coal-fired power plants. (One megawatt of electricity is enough power to supply between 800 and 1,000 homes, depending on the region.)
There were also hundreds of megawatts of new solar and wind options in the competition, vying for PJM’s approval. And PJM revised its projections of future demand, based on consumer, commercial and industrial customers switching to more efficient technologies.
The bottom line? The auction showed that PJM will have more than enough power — with a 22 percent reserve — in the future. And that it will be less expensive.
For customers, the auction means lower prices. For companies owning power plants, the results mean lower revenues.
The auction results are sure to ignite further arguments before the Public Utilities Commission of Ohio, where FirstEnergy has refiled its request for subsidies to help its Davis-Besse nuclear power plant on Lake Erie and the W.H. Sammis coal-burning plant on the Ohio River. The PUCO approved a special arrangement weeks ago, only to see federal authorities object to a key part of it.
FirstEnergy has argued for more than a year and a half that its old plants cannot compete well with gas-fired plants, but that when natural gas prices increase — in less than three years — coal and nuclear will be competitive again. And consumers will be insulated from price spikes.
The PJM auction, which identifies the most efficient plants whose owner commits will be running in three years, calls into question FirstEnergy’s arguments about natural gas prices.
Douglas Colafella, FirstEnergy spokesman, said he expects the company to have more to say about the auction in the weeks ahead.
But the company’s main foes in the PUCO battles of the last 21 months were not so reticent.
“Today’s favorable electricity auction shows that competitive markets can provide better prices for consumers than government bailouts and subsidies for utilities,” said Ohio Consumers’ Counsel Bruce Weston on Tuesday evening. “Ohioans’ electric bills should follow the low prices in the market.”
Weston’s analysts and outside experts have testified that the deal approved by the PUCO would add about $100 a year for the next eight years to every residential customer’s electric bills.
The Ohio Manufacturers’ Association, representing both small companies and larger industries, has also opposed the FirstEnergy plan.
“The [auction] result shows the forces of supply and demand are working, attracting new generation resources, resulting in lower clearing prices,” said spokesman Ryan Augsburger. “The bottom line, the market is producing savings and reliability for customers large and small.”