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FirstEnergy (FE) Affiliate to Deactivate 5 Coal-Fired Units
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Akron-based diversified energy company, FirstEnergy Corporation (FE - Free Report) announced that its affiliate FirstEnergy Solutions will retire coal-fired power totaling 856 megawatt (“MW”) at two of its plants.
Units to go Offline
The utility will retire four of the seven units, with a cumulative generation capacity of 720 MW, at the W.H. Sammis Plant in Ohio in May 2020. The remaining three units will continue to generate 1,490 MW of power.
The company also intends to sell or shut down the last operating unit at its Bay Shore plant, which generates 136 MW of electricity, by Oct 2020.
FirstEnergy cited high operating costs of aging coal-fired plants, which made them uneconomic in the wake of the current energy market fundamentals, as the primary reason behind the shutdown. Besides, the wholesale energy markets are no longer competitive.
Stringent regulatory directives on emission control, and increasing usage of cheap natural gas and alternate sources of energy have lowered the usage of coal for electricity production.
Currently, FirstEnergy has a generation capacity of 5,167 MW in Ohio, which will go down to 4,311 MW after the retirements in 2020. However, the deactivations are subject to review by PJM (Pennsylvania-New Jersey-Maryland) Interconnection for reliability impacts.
With the latest announcement, Ohio will have witnessed the shutdown of a total of 10,093 MW since 2010.This exceeds retirements in any other state and constitutes 9.5% of the total retirement in the U.S during the period.
These deactivations are part of FirstEnergy’s efforts to expand its regulated generation mix in order to stabilize the company’s earnings trajectory. The last few years saw FirstEnergy successfully broadening its regulated operations. In the coming years, it plans to further reduce the merchant fleet generation so as to cushion itself against market volatilities.
A Similar Step by a Peer
Recently, Exelon Corporation (EXC - Free Report) took formal initiatives to shut down two of its loss-making nuclear power plants. The company informed the Nuclear Regulatory Commission (NRC) of its intention to close the Clinton and Quad Cities nuclear stations in 2017 and 2018, respectively.
From 2009 through 2015, Quad Cities and Clinton have incurred more than $800 million in losses and Exelon has been working on the Illinois energy legislation for the past two years to find a solution. However, there has hardly been any progress on this front, leading the company to take this final step. (Read: Exelon (EXC - Free Report) Takes Formal Steps to Close 2 Nuclear Units)
Zacks Rank
FirstEnergy carries a Zacks Rank #3(Hold).A couple of better-ranked stocks in the electricity space include Alliant Energy Corporation (LNT - Free Report) and Avista Corp. (AVA - Free Report) , both carrying a Zacks Rank #2 (Buy).
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FirstEnergy (FE) Affiliate to Deactivate 5 Coal-Fired Units
Akron-based diversified energy company, FirstEnergy Corporation (FE - Free Report) announced that its affiliate FirstEnergy Solutions will retire coal-fired power totaling 856 megawatt (“MW”) at two of its plants.
Units to go Offline
The utility will retire four of the seven units, with a cumulative generation capacity of 720 MW, at the W.H. Sammis Plant in Ohio in May 2020. The remaining three units will continue to generate 1,490 MW of power.
The company also intends to sell or shut down the last operating unit at its Bay Shore plant, which generates 136 MW of electricity, by Oct 2020.
FirstEnergy cited high operating costs of aging coal-fired plants, which made them uneconomic in the wake of the current energy market fundamentals, as the primary reason behind the shutdown. Besides, the wholesale energy markets are no longer competitive.
Stringent regulatory directives on emission control, and increasing usage of cheap natural gas and alternate sources of energy have lowered the usage of coal for electricity production.
FIRSTENERGY CP Price
FIRSTENERGY CP Price | FIRSTENERGY CP Quote
Background
Currently, FirstEnergy has a generation capacity of 5,167 MW in Ohio, which will go down to 4,311 MW after the retirements in 2020. However, the deactivations are subject to review by PJM (Pennsylvania-New Jersey-Maryland) Interconnection for reliability impacts.
With the latest announcement, Ohio will have witnessed the shutdown of a total of 10,093 MW since 2010.This exceeds retirements in any other state and constitutes 9.5% of the total retirement in the U.S during the period.
These deactivations are part of FirstEnergy’s efforts to expand its regulated generation mix in order to stabilize the company’s earnings trajectory. The last few years saw FirstEnergy successfully broadening its regulated operations. In the coming years, it plans to further reduce the merchant fleet generation so as to cushion itself against market volatilities.
A Similar Step by a Peer
Recently, Exelon Corporation (EXC - Free Report) took formal initiatives to shut down two of its loss-making nuclear power plants. The company informed the Nuclear Regulatory Commission (NRC) of its intention to close the Clinton and Quad Cities nuclear stations in 2017 and 2018, respectively.
From 2009 through 2015, Quad Cities and Clinton have incurred more than $800 million in losses and Exelon has been working on the Illinois energy legislation for the past two years to find a solution. However, there has hardly been any progress on this front, leading the company to take this final step. (Read: Exelon (EXC - Free Report) Takes Formal Steps to Close 2 Nuclear Units)
Zacks Rank
FirstEnergy carries a Zacks Rank #3(Hold).A couple of better-ranked stocks in the electricity space include Alliant Energy Corporation (LNT - Free Report) and Avista Corp. (AVA - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>