Moody’s: Let First Energy nuclear plants close
hree planned nuclear plant closures in Ohio and Pennsylvania are an all-around positive for other power plant operators in their energy market, credit-rating giant Moody’s said Friday.
Its new analysis suggests that letting the First Energy plants close as scheduled would raise prices for other power plants looking to bid in next month’s auction by regional grid operator PJM Interconnection, which would improve earnings. That’s good for other power plants, such as coal-powered ones, that are facing economic hurdles.
“The closures likely will raise prices in the next PJM capacity auction in late May, a material upside for other generators and project finance transactions with exposure to the PJM market,” the analysis read.
he analysis doesn’t give any credence to a plan President Trump and Energy Secretary Rick Perry are considering to provide emergency relief to First Energy and its ailing coal and nuclear fleet.
Nuclear and coal plants have faced increased competition from low-cost natural gas power plants in recent years, forcing less-competitive power plants to close.
Moody’s said the although “federal or state subsidies could ultimately rescue these plants, repeated efforts to gain state-sponsored financial support in the past two years have failed.”
First Energy’s electric marketing arm filed for bankruptcy recently, as it asked the Trump administration for emergency help. The help would come from a little-known section of the Federal Power Act No. 202.
“About nine of your people just came up to me outside, could you talk about 202, and we’ll be looking at that as soon as we get back,” Trump said at an event in West Virginia Thursday.
The Energy Department is considering First Energy’s request. Industry sources are not sure when the emergency order could be made. The Section 202 order is meant to keep power plants running in the wake of war or supply disruptions.
The company wants the Trump administration to apply its authority broadly across the region where First Energy operates, but it is questionable whether the agency has the authority to do so. There is no recent precedent for such a broad interpretation. Most of the agency’s emergency orders have applied to individual plants for a limited amount of time.