Union leader says buyer exists for money-losing FirstEnergy plants

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Bob Whalen came to Waynesburg with a plan to save FirstEnergy's money-losing coal plants -- or at least the beginnings of a plan.

The president of System Local 102, the utility workers union that represents hundreds of FirstEnergy Corp. workers slated to lose their jobs Oct. 9, told FirstEnergy executives there's a buyer out there for the Hatfield's Ferry plant in Masontown, and maybe even for the Mitchell Power Station in Courtney, if only the company would give some hint of wanting to sell.

"If there was a buyer for Hatfield or Mitchell, would you consider it?" Sen. Tim Solobay, D-Canonsburg, asked Jim Lash, FirstEnergy's president of generation, at a hearing the senator called Friday to discuss the impending closures.

Mr. Lash demurred at first, saying every company in the industry knows the plants aren't economically feasible and that looming environmental costs are the nail in the coffin.

"We've had no offers for the power plants," he said. "No one has approached us to buy those two stations."

Mr. Whalen declined to name the buyer he was referring to, but officials at International Electric Power, a Pittsburgh-based developer of power projects abroad, confirmed in a phone call after the hearing that they're interested in the plants. The company declined to give further details.

After the hearing, Charles Lasky, FirstEnergy's vice president of fleet operations, approached Mr. Whalen to find out about the potential buyer, but Mr. Whalen said he'd first have to know if the plants are for sale.

"He said he's going to look into it," Mr. Whalen later recounted. "I honestly don't believe they are."

Mr. Whalen said he believes FirstEnergy wants to see the plants shut down so they won't compete with the company's other generation assets, thereby driving up the price of electricity in the market.

Mr. Solobay's hearing Friday brought together stakeholders to discuss whether the closing of the two plants will impact grid reliability and consumers.

PJM, the Valley Forge-based operator that manages the electric grid for 13 states including Pennsylvania, first indicated the shutdowns would create reliability concerns, but "as the analysis progressed, we found that many of the reliability violations could be addressed by upgrades to transmission systems that were already planned," said Andy Ott, executive vice president at PJM.

Those that couldn't be addressed by upgrades -- the few days in the summer of 2014 when PJM projects Hatfield's generation might be needed to meet peak demand -- might be addressed by changing the configuration of the transmission grid, he said.

PJM is expected to complete its reliability analysis by the beginning of October and will announce then if FirstEnergy will be asked to run the plants after Oct. 9 to address reliability concerns.

Cheap natural gas was assigned a large chunk of the blame for shuttering the two coal plants, as well as the nine coal plant closings that FirstEnergy announced last year, and, potentially, future nuclear retirements mentioned during the hearing.

Mr. Ott predicted that by 2019, 40 percent of the generation on PJM's grid would come from gas.

That's pushing out coal, which is saddled with environmental compliance costs, and both Mr. Lash and Mr. Ott said more coal plant closures are in the works.

Mr. Lasky later clarified that while the company constantly evaluates its assets, it doesn't have immediate plans to close any other facilities.

"You've seen a tectonic shift in generation [because of] natural gas," said Robert Powelson, chairman of the Pennsylvania Public Utility Commission.

"It's a destructive force to the market," he said, quickly adding, "in kind of a good way."

But Mr. Powelson worried that soon the same stakeholders gathered to persuade FirstEnergy to tame its pace would be back, talking with operators of nuclear plants being edged out by gas prices.

Mr. Powelson's impassioned speech was part reproach of federal regulators' heavy hand in trying to "decarbonize" the U.S., part musing about the "energy market arbitrage" inside PJM's capacity auctions, and part finger-wagging at FirstEnergy for telling Wall Street investors in March that it was considering co-firing with natural gas three plants, including Hatfield's Ferry, then ruling out the option three months later.

Mr. Lash said after further study, co-firing was determined to be uneconomical.

"I scratch my head because just north of us, in Indiana County, GE Capital made an announcement that they will invest $750 million to keep [a coal plant] active," Mr. Powelson said, referring to Homer City Generating Station in Indiana, Pa.

FirstEnergy, however, would have to invest $120 million to comply with mercury and air toxics standards, Mr. Powelson continued, and if its recent sale of hydro assets totals more than that, then "you're playing with house money," he said.

Mr. Powelson also advanced hope that, with the buy-in of the federal Environmental Protection Agency and the U.S. Department of Energy, Hatfield's Ferry might become a pilot site for carbon capture and sequestration technology, thereby saving the plant from closure. He said he is waiting to hear back about a request he sent to EPA administrator Gina McCarthy for a meeting on "what's a 21st century coal plant going to look like?"

Mr. Powelson also suggested that President Barack Obama could stop the plant's closure to protect reliability.

"The president has this card to pull out," he said.

About 30 members of the Utility Workers of America Local 102M sat behind their president, Mr. Whalen, as he questioned FirstEnergy's management. Many of them wore red T-shirts inscribed: "FirstEnergy unfair: bonuses for bosses, cuts for workers."

Jim Premoshis, who works in maintenance at Hatfield's Ferry and has been with the company for 34 years, heard Mr. Lash reiterate that employees won't be eligible for early retirement. Mr. Premoshis has just one year left until he is eligible to retire.

His wife, Maria Premoshis, stood by his side, imagining their future expenses.

"It's $1,600 a month for Cobra [medical insurance]," she said. "That's what you get for 34 years of being loyal."

Mr. Lash said FirstEnergy hopes to reassign about a quarter of the 380 workers whose jobs are being eliminated and will help the others with resume development, training and job hunting. Laid-off workers also will receive severance pay, he said.

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Anya Litvak: alitvak@post-gazette.com or 412-263-1455.


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