FirstEnergy Corp. shares rose nearly 2% in midday trading Thursday after the company said it will shut down six coal-fired power plants by September 1, 2012.
Four of the plants are located in Ohio, while the other two closures will happen at facilities in Pennsylvania and Maryland. Collectively these plants have a total capacity of 2,689 MW. According to FirstEnergy Generation president James H. Lash, the cost of retrofitting these facilities to meet the new Mercury and Air Toxics Standards (MATS) mandated by the Environmental Protection Agency (EPA) forced the company's decision to shut down operations.
"We recently completed a comprehensive review of our coal-fired generating plants and determined that additional investments to implement MATS and other environmental rules would make these older plants even less likely to be dispatched under market rules. As a result, it was necessary to retire the plants rather than continue operations," said Lash.
And so the closure trend continues. FirstEnergy joins a growing list of big utilities which have said they will shut down portions of their coal-fired generation fleet rather than implement systems to reduce emissions. Both Duke Energy and Ameren Corporation have announced plans for closing plants. However, the 2,689 MW capacity that FirstEnegy will retire far surpasses the capacity that Duke and Ameren will eliminate.
In making this choice, FirstEnergy will dispose of nearly 10% of its total power capacity of 23,000 MW. For a company that relies on coal power plants for the majority of its revenue, MATS could present significant challenges.
Although the utility claims a balanced fuel mix, coal-fired generation makes up 64% of its total capacity. However, the company also claims that since 1970 it has invested $10 billion in environment protection efforts for its coal plants. These investments include the recent historic retrofit at the 2,233 MW coal-fired W.H. Sammis Plant -- the company's largest generation facility. The five-year, $1.8 billion project was one of the largest of its kind in the history of the U.S.
FirstEnergy may be looking at to add clean, renewable sources of energy to replace the coal power it is losing.
In September 2011, FirstEnergy launched a Request for Proposal (RFP) to secure 5,000 Solar Energy Credits (SRECs) and 20,000 Renewable Energy Credits (RECs) produced by generating facilities in Ohio each year starting in 2011 and continuing through 2020. This was followed by an announcement in December that the company had signed a power purchase agreement with Maryland Solar LLC to buy electricity generated at a proposed 20 MW solar farm.
No matter how FirstEnergy fills its power void, closing these plants will mean the loss of jobs. The company says that 529 employees will be "directly affected" by the closures. Says Lash, "This decision is not in any way a reflection of the fine work done by the employees at the affected plants, but is related to the impact of new environmental rules."
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