FirstEnergy exec calls for ‘urgent’ aid
OAK HARBOR, Ohio — Calling warnings of the Davis-Besse nuclear power plant’s premature closure “real” and the need for a bailout “urgent,” FirstEnergy Corp.’s top nuclear official left little doubt Friday that Ottawa County’s largest employer is in trouble.
Sam Belcher, FirstEnergy’s chief nuclear officer, said the utility’s other nuclear plants — the Perry nuclear plant east of Cleveland and the twin-reactor Beaver Valley complex northwest of Pittsburgh — are likewise in danger of premature closing by the summer of 2018 unless a buyer emerges or the utility gets help from legislators in Ohio and Pennsylvania.
He also cited FirstEnergy’s coal-fired power plants, including its massive Sammis plant in southern Ohio and its Bruce Mansfield plant, which is also northwest of Pittsburgh. The Beaver Valley and Bruce Mansfield plants are both near Shippingport, Pa.
The plants are in dire straits because of how fracking has disrupted energy markets.
Coal and nuclear power generators are having trouble competing nationally against natural gas and renewable energy, especially after the oil and gas industry developed its game-changing horizontal drilling technique for fracturing, or “fracking,” shale a few years ago. That has unlocked vast reserves of previously inaccessible natural gas, dropping its price to record lows.
The hit has been especially hard in Ohio, Pennsylvania, and other states with deregulated electricity markets, where competition is — by design — fiercest.
“Our plants have been losing money. We’ve continued to operate them at a loss. But, at some point, those economics don’t make sense,” Mr. Belcher told The Blade during an hourlong telephone interview from his corporate office in Akron.
He discussed reasons why FirstEnergy announced just before Christmas it was going to “exit competitive generation.”
“We no longer can be exposed to continually changing market conditions,” Mr. Belcher said.
The utility decided in December to give the situation another 18 months to play out.
Now, three months closer to that self-imposed deadline, nothing meaningful has been done to turn around the situation in Ohio and Pennsylvania, Mr. Belcher said.
“The situation is real. It’s urgent,” Mr. Belcher said. “In the absence of something happening, we’re going to have to make some tough decisions.”
The easiest solution would be to re-regulate electricity markets. But he said he doesn’t expect either state to do that, because it would require them to do away with competition.
FirstEnergy’s effort to get guaranteed cash flows over 15 years to ensure the survival of its Ohio coal and nuclear operations through a power-purchase agreement was eventually accepted by the Public Utilities Commission of Ohio — but only after the two sides agreed to shave that window of time by about half, to eight years.
That effort then was subsequently blocked by a challenge by the Federal Energy Regulatory Commission on the grounds that such a plan, decried as a bailout by critics, would be akin to introducing a wild card into energy markets.
“Clearly, the negotiations and discussions we had with PUCO were an attempt to save Davis-Besse and Sammis,” Mr. Belcher said. “I make no apologies for that.”
FirstEnergy could have fought FERC’s challenge harder, but “our situation and timeline doesn’t support that,” he said.