FirstEnergy Corp.’s troubled competitive generating companies late Saturday, March 31, filed for federal Chapter 11 bankruptcy reorganization with the U.S. Bankruptcy Court in the Northern District of Ohio, in the company’s home city of Akron.
The move is the latest in what appears to be the end game in the company’s attempt to rid itself of market-driven generation, as the company just days earlier petitioned the U.S. Department of Energy for an emergency order to keep the uncompetitive wholesale plants running. In January, the Federal Energy Regulatory Commission rebuffed a move by the Trump administration and DOE to tilt competitive wholesale markets to rescue uncompetitive nuclear and coal plants bidding into the PJM Interconnection, where FirstEnergy is a player.
The company on multiple occasions sought to get Ohio and Pennsylvania to pass nuclear relief packages similar to those in Illinois and New York to subsidize the nukes for their absence of carbon dioxide emissions. It has failed repeatedly.
The filing covers FirstEnergy Solutions (FES) and subsidiaries, and FirstEnergy Nuclear Operating Company (FENOC), which FirstEnergy says is “to facilitate an orderly financial restructuring.” Some electricity analysts suggest that the filing is designed to clear off the debt of the competitive companies so they can perhaps become attractive to a buyer. Otherwise, FirstEnergy might have to liquidate that arm of its business.
FES president Donald Schneider said the bankruptcy filing “represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief.”
FirstEnergy says the “filing entities” have over $550 million in cash on hand, enough liquidity to continue normal operations as the bankruptcy process move forward. More details about the filing are available at a special website the company has established, www.fes.com/restructuring, although that website did not appear to exist as of early Sunday afternoon. Details are also available at the companies’ claims agent, Prime Clerk, at https://cases.primeclerk.com/FES.
FES and FENOC own and operate two coal-fired plants, a dual-fuel gas/oil plant, a petroleum coke-fired plant, and three nuclear plants operating in FERC-regulated competitive wholesale markets. Parent FirstEnergy announced in 2016 that would work to exit competitive generation. On March 28, FirstEnergy said it would close the nuclear fleet over the next three years. The nuclear plants are Davis-Besse and Perry in Ohio, both single units, and two-unit Beaver Valley in Pennsylvania.
In addition to FES and FENOC, the debtors filing for protection include FirstEnergy Mansfield Unit 1 Corp. (owning the large Bruce Mansfield coal-fired plant in Pennsylvania), and Norton Energy Storage (a compressed-air storage project in a former limestone mine in southeastern Ohio).
POWER magazine quoted FirstEnergy CEO Chuck Jones, “The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment.” (Disclosure: I am a FirstEnergy customer through its Potomac Edison distribution company.)
Mary Anne Hitt, Director of Sierra Club’s Beyond Coal campaign, released a statement: “FirstEnergy Solutions’ bankruptcy is a cautionary tale for utilities, investors, and public officials who think the coal and nuclear industries will somehow rebound in the coming years. They will not. America’s 21st century energy market demands cheap, flexible energy resources that can rapidly shift with electricity demands and don’t pollute local air and water. Coal and nuclear plants are too expensive and too dirty to compete in the modern market.”
— Kennedy Maize