Ohio-based electric utility holding company FirstEnergy last Friday (Feb. 9) announced a retreat from its 2030 greenhouse gas reduction goal and a reprieve for two large West Virginia coal-fired power plants.
The same day, a state court in the company’s headquarters city of Akron indicted and arraigned two former top FirstEnergy executives and the former head of Ohio’s utility regulatory commission on 27 counts related to the 2019, $60 million fraud and bribery scandal that got the Republican legislature to pass House Bill 6 subsidizing two economically failing nuclear power plants.
At an earnings conference call, CEO Brian Tierney said, “In 2020, we set a goal of achieving net carbon neutrality by 2050, with an interim goal of reducing our Scope 1 greenhouse gas emissions by 30% by 2030. Achieving the 2030 interim goal was predicated on meaningful emissions reductions at our Fort Martin and Harrison power plants in West Virginia, which account for approximately 99% of our greenhouse gas emissions. We’ve identified several challenges to our ability to meet that interim goal, including resource adequacy concerns in the PJM region and state energy policy initiatives. Given these challenges, we have decided to remove our 2030 interim goal.”
Bloomberg commented, “Changing market conditions also mean those facilities are going to be more profitable to keep open than historically projected.”
The Fort Martin plant in Maidsville W.Va. consists of two units totaling 1,098 MW of capacity, while Harrison in Haywood W.Va. has three units with 1,984 MW of capacity. In a filing with West Virginia utility regulators, FirstEnergy projects that it will close Fort Martin in 2035 and Harrison in 2040. Those dates are in no way binding on the company, nor is the 2050 goal.
FirstEnergy’s move represents an about-face on the 15-year industry-wide trend of coal plant retirements. Low-cost natural gas derived from hydraulic fracturing, more than concerns about CO2 emissions, has driven the widespread shuttering of coal units.
FirstEnergy’s retreat to coal may be part of an industry trend of failing to deliver on promises to shun coal. In an October report, the Sierra Club’s “Beyond Coal” project reported in The Dirty Truth About Utility Climate Pledges, “While many utilities acknowledge the need to reduce emissions and have made public commitments to address climate change, their plans reflect a different reality of insufficient ambition and stalled progress.”
The report looked at 77 utilities companies, owned by 50 parent companies with substantial investments in coal and gas generation. “Even though we are already well into this pivotal decade for urgent action, companies continue to lag in their plans for a transition to clean energy,” the report concluded. “While utilities tout their climate pledges as signs that they are committed to a clean energy transformation, these goals are only greenwashing unless utilities’ actual plans for the future reflect pathways to make those goals reality.” On a scale of 0-100 reflecting the company’s progress in meeting greenhouse gas reduction goals, FirstEnergy scored 0 for 2021, 2022, and 2023, matched at the bottom only by Florida’s Seminole Electric Cooperative.
Bloomberg noted, “FirstEnergy’s move comes after Duke Energy Corp. warned North Carolina regulators that meeting carbon-reduction mandates may take longer than the 2030 deadline, given the pace of economic development that drives power-demand growth. Southern Co. executives, meanwhile, have been hinting that they may need to delay some coal-pant retirements.”
FirstEnergy consists of 10 operating utilities in Ohio (Ohio Edison, The Illuminating Co., Toledo Edison); Pennsylvania (Met-Ed, Penelec, Penn Power, West Penn Power); New Jersey (Jersey Central Power & Light); West Virginia (Mon Power); Maryland (Potomac Edison).
The parent company last week reported 2023 profit of $1.123 billion on $12.9 billion in revenue ($1.90/share), compared to 2022 profits of $406 million on revenues of $12.5 billion ($0.71/share).
The company’s decision to ditch its 2030 goal and stick with coal pleased Wall Street. The company’s shares (FE:NYSE) have seen a sharp rise in the days since the coal announcement, from about $35.50/share to $37.77 or 6.7% at the close Monday (Feb. 12). According to Yahoo Finance, FirstEnergy is the 12th largest U.S. investor-owned utility.
The company has a sordid past, as the perpetrator of the massive bribery and racketeering scheme involving the Republican-controlled state legislature and state utility regulators. It was designed to bail out the Davis Besse and Perry nukes, which had been failure to win awards in the PJM capacity market.
The unravelling of the scheme and its details led to the ouster and jailing of the Ohio House speaker, firings at the company, the repeal of the subsidies and disgorgement of some $26 million in illegal gains, a $230 million plea bargain with the U.S. Department of Justice in 2021, and federal criminal charges against the former head of the state utility regulatory commission. In early 2022, a Federal Energy Regulatory Commission audit found that the company had cooked its books to hide the bribery scheme, resulting in a refund to its Ohio customers of at least $9.5 million.
As FirstEnergy CEO Tierney was back tracking on coal, a Summit County court charged former CEO Chuck Jones and Michael Dowling, former senior executive for external affairs, for their roles in the criminal enterprise, along with state charges against Sam Randazzo, former head of the Public Utilities Commission of Ohio, already under federal indictment. All three entered not guilty pleas.
According to the indictment, “Jones and Dowling actively worked to spend FirstEnergy money to improperly influence Randazzo to exercise the authority of PUCO chairman to advance FirstEnergy’s regulatory and policy agendas.”
Republican Ohio attorney general Dave Yost said, “FirstEnergy executives Chuck Jones and Michael Dowling, for the first time, will be held to answer for their corrupt acts. There can be no justice without holding the check writers and the masterminds accountable. In May 2019 as he was secretly running his public corruption racket, Chuck Jones told a shareholder meeting, ‘I’ve been with FirstEnergy for more than 40 years, and I’m certain that 2018 was one of the most pivotal and productive in our company’s history.’ He was correct, but not for the reasons his audience assumed.”
–Kennedy Maize