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FirstEnergy asks DOE for emergency response to rescue PJM Coal, nuclear power plants



Dive Brief:

  • FirstEnergy Solutions has asked the US Department of Energy Thursday to issue an emergency order for the cost recovery of coal and nuclear power plants in the PJM interconnection, with market conditions "endangering energy security -reliability".
  • FirstEnergy has initiated the appeal pursuant to Section 202 (c) of the Federal Electricity Supply Act, which allows the Department of Energy to issue emergency orders to keep the facilities up and running. The company announced Wednesday that it would close three nuclear plants in PJM before the end of their operational life.
  • Orders under 202 (c) are typically used to provide a reliable supply of power after sudden emergencies, and not to isolate uneconomic assets from market forces. A DOE assistant secretary said last month that the agency "would never" use a 202 (c) order for economic reasons, and lawyers say approval of FirstEnergy's application would pose immediate legal challenges.

Dive Insight:

In a letter to Energy Secretary Rick Perry, FirstEnergy has requested that the DOE exercise its powers under 202 (c) to ensure "fair and reasonable cost-based tariffs" for 25-day generators Location fuel supply and recover today from their costs.

On facility for facility, the generators would negotiate with PJM for "just and reasonable cost-based rates providing full cost of recovery." FirstEnergy also demanded that the DOE's statement PJM "immediately begin to negotiate with such generators about the terms of such supply."

FirstEnergy wants the emergency order to remain in force for four years or until the minister concludes that the emergency has stopped because the PJM markets were scheduled to provide these units for the fail-safe and reliability services they provided depending on what time is later. "

] FirstEnergy's request did not identify any specific cost recovery facilities, but did include a list of all coal and nuclear generators in PJM ̵

1; a total of 85.

The claim is based on the claim that market conditions in PJM eventually put so many coal and nuclear power plants out of service that reliability is threatened. Large, inflexible assets in this and other markets have to contend with the comparatively low cost of natural gas and renewable energy, and last month the CEO of FirstEnergy said if the situation persists " there will be no coal or gas in these markets Nuclear power plants give more. "

" Threats to the nation's power and network are real and can no longer be ignored " wrote FirstEnergy . "The nation's security is at risk if DOE will not act now to conserve fuel-efficient generation and diversity of supply."

Federal energy regulators have already weighed this reliability issue. Last September, the Department of Energy proposed a similar cost recovery plan to the Federal Energy Regulatory Commission targeting 90 day fueling facilities. However, the FERC unanimously rejected the plan and wrote that DOE and its allies – including FirstEnergy – did not prove that reliability was compromised or that the cost recovery plan would improve conditions.

The claim for Section 202 (c) seems to be FirstEnergy is trying to circumvent this decision, said Joel Eisen, professor of energy law at the University of Richmond.

"The application expressly states that FERC could not compensate for these facilities," he said. "There is no question that this is an attempt to do what the [DOE proposal] would have done."

Section 202 (c) Commands are rare and are typically issued in response to natural disasters. President Obama has not issued a request under 202 (c) author, Ari Peskoe, director of the Harvard Energy Law Initiative, noted in a tweet . President Bush did it five times – twice in response to hurricanes.

Recently, in April 2017, the DOE approved an order 202 (c) to keep a large coal-fired power station in the Southwest Power Pool online until other generators were activated. Previous Trump government contracts targeted one dam in Oklahoma and two coal-fired power plants owned by Dominion Energy in Virginia.

Those situations differ from FirstEnergy in that they handle sudden emergencies and not gradual failures through market forces.

"[Section 202(c)] is not for any hypothetical future situation that might arise," he said. "It's rather emergencies like the bottlenecks after the hurricanes Katrina and Ike."

PJM and other network operators are already seeking to reform the pricing structure for large, inflexible generators. These efforts are controversial as iron and other industry observers fear they might be a mere coal and nuclear power-saving package, but the Richmond professor said they are the right forum to address generator-compensation problems.

"These steps, whether made in the energy or capacity markets … are the right mechanism to address the market forces that FirstEnergy is discussing," Eisen said, "not 202 (c) orders." [19659020] It remains unclear whether DOE officials are open to an emergency order. Just last month, DOE secretary Bruce Walker said "the authority would never use its emergency authority to keep inefficient generators online." Last August, Perry reportedly refused a request from the coal miner

If DOE Approved the FirstEnergy Request, the FERC has Little Regulatory Access Said Iron, meaning that any challenge would have to come through the legal system.

"Neither the [FPA] Statute nor the Regulations provide authority for FERC to redefine the terms of the contract or its terms, "he said," which means that the practical recourse is to the courts. "[19659007] This legal challenge would probably take place soon after approval, shortly after the letter from F irstEnergy, NRG Energy, which owns gas generators in PJM that compete with FirstEnergy's facilities, issued a statement condemning the plan.

"There is absolutely no reliability issue at PJM – they said that – and in any case, PJM would investigate the impact of the announced retirements on reliability and could allow a Reliability Must-Run agreement when needed Spokesman David Gaier said via e-mail, "The only crisis concerns FirstEnergy's shareholders, and Ohio taxpayers should not be asked to rescue FirstEnergy just because they do not know how to operate their power plants profitably." [19659026] 3 Nuclear Closures

The Day Prior to his letter to Perry, FirstEnergy Solutions informed the PJM and the US Nuclear Regulatory Commission that two nuclear power plants in Ohio and one in Pennsylvania with a total capacity of 4 GW would be deactivated over the next three years

Closures include the 908 MW Davis-Besse nuclear power plant in Ohio, and the 1965 MW Beaver Valley P ennsylvania and the 1,268 MW Perry nuclear power plant in Ohio.

FirstEnergy in January warned Davis-Besse if Ohio legislators did not approve investment aid.

Don Moul, President of FES "While the company's assets have taken aggressive measures to reduce costs, the market challenges for these units are beyond their control."

Moul also called on state officials in Ohio and Pennsylvania to consider political solutions. FirstEnergy will continue to work on legislative solutions to keep the facilities up and running and will also look for potential buyers.


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