FirstEnergy hires adviser to sell hydropower plants - CEO
May 7 (Reuters) - U.S. power company FirstEnergy Corp said on Tuesday it hired an adviser and started implementing its plan to sell up to 1,240 megawatts of unregulated non-core hydro generation assets.
The company did not identify the hydro plants to be sold but wants to complete the sale in the second half of the year, FirstEnergy CEO Anthony Alexander said on the company's first- quarter earnings call.
He said FirstEnergy plans to use the proceeds of the hydro sale to reduce debt, though he did not estimate how much the hydro plants were worth.
FirstEnergy owns several unregulated hydro facilities in Pennsylvania, Virginia and West Virginia, including part of its 1,212-MW stake in the 3,003-MW Bath County pumped storage plant in Virginia, and the 451-MW Seneca pumped storage plant and 52-MW Lake Lynn hydro plant in Pennsylvania.
One megawatt powers about 1,000 homes.
A unit of U.S. power company Dominion Resources Inc. operates the Bath County facility. About 60 percent of FirstEnergy's 1,212-MW stake in Bath County is unregulated. The other 40 percent is regulated and not for sale.
FirstEnergy first announced it was looking to sell the competitive hydro plants in February.
In addition to the hydro asset sale, Alexander said public power provider American Municipal Power (AMP) told FirstEnergy that AMP no longer intends to proceed with FirstEnergy's construction of the 873-MW Eastlake simple cycle natural gas-fired peaker plant on Lake Erie in northeast Ohio.
AMP provides power to municipal power companies in Ohio, Pennsylvania, Michigan, Virginia, Kentucky, West Virginia and Delaware.
Without AMP, Anthony said, FirstEnergy will not bid the Eastlake peakers into this month's PJM reliability pricing model capacity auction for the 2016-2017 period.
PJM operates the power grid in 13 U.S. Mid-Atlantic and Midwestern states, including Ohio, serving more than 60 million people.
PJM uses the capacity auction to secure resources to ensure there is enough power available in the future.
"We do not expect AMP's decision to not proceed with the project to have any significant impact on the auction," Anthony said, noting FirstEnergy had about $700 million in transmission investments planned to support reliability in Ohio through 2016.
He noted FirstEnergy will continue to work with PJM to address the need for any additional transmission projects, which would create additional investment opportunities beyond the projects identified through 2016 or in future years to further bolster and support system reliability in northern Ohio.
HARRISON NOT CRITICAL
In addition, Alexander said federal regulators approved a proposal to transfer 80 percent of the 1,954-MW Harrison coal-fired station in West Virginia from FirstEnergy's unregulated FirstEnergy Solutions unit to its regulated Mon Power unit in West Virginia.
Alexander said the company is waiting for a filing from federal regulators related to financing for the transaction and hearings at the state regulators scheduled for May 29-31.
"We believe the proposed transaction is good for the state of West Virginia, as it is expected to help ensure reliable power for our West Virginia utility customers for many years to come," Alexander said.
But he noted the company's recent success with refinancing its debt, among other things, means the Harrison transaction, while still important to both West Virginia and FirstEnergy Solutions, is "no longer critical to the successful completion of our financial plan."
Finally, Alexander said with respect to the federal environmental Mercury and Air Toxics Standards rule, or MATS, the company was granted one-year extensions for compliance until April 2016 in both Pennsylvania and West Virginia for several coal plants.
The plants are the 1,590-MW Hatfield Ferry and 2,510-MW Bruce Mansfield plants in Pennsylvania, and the 1,107-MW Fort Martin, Harrison and 1,288-MW Pleasants plants in West Virginia.
"As we continue to refine our capital expenditures related to MATS, we are lowering our estimated costs to approximately $925 million from the $975 million previously reported," Alexander said.