Coal / Energy / FirstEnergy

Experts: DOE had no choice but to reject lifeline for FirstEnergy coal units

FirstEnergy Corp. plans to retire units 1 through 4 at the seven-unit W.H. Sammis coal plant in Stratton, Ohio, in May 2020. Executives at FirstEnergy and Ohio coal producer Murray Energy have tried unsuccessfully to get the U.S. Department of Energy to invoke an emergency order that would keep FirstEnergy’s coal plants online.

NEW YORK, NY — “The U.S. Department of Energy’s decision to rebuff pleas for immediate action to preserve a fleet of FirstEnergy Corp. unregulated coal plants was not hugely surprising to industry observers, who said the agency likely did not want to pre-empt current procedures amid industry stakeholder and legal concerns.

…The decision, made shortly before the DOE’s Aug. 23 release of its much-anticipated grid reliability study, also does not appear to be a surprise to Wall Street.

‘We never thought that the Trump administration was going to extend its power and reach and provide a lifeline for coal assets,’ Guggenheim Securities LLC analyst Shahriar Pourreza said in an Aug. 24 phone interview with S&P Global Market Intelligence. ‘And the reason why is that coal plants aren’t a major tax base for a state. They’re not a major job-creator for a state, unlike a nuclear plant, and they’re very economically challenged in this kind of a [low] gas price environment. So, the incentive to save coal is substantially lower than the incentive to save nuclear.’

The DOE, at the request of FirstEnergy and Ohio-based coal producer Murray Energy Corp., did consider issuing an emergency exemption under the Federal Power Act that would allow the coal plants to operate absent compliance with environmental regulations to maintain system reliability but ultimately decided not to, The Associated Press reported Aug. 22. The decision was backed by the White House, an Energy Department spokeswoman confirmed to S&P Global Market Intelligence.”

— Darren Sweeney, SNL Financial

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