May 7 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
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
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
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
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,"