FirstEnergy to sell Pennsylvania gas plants
FirstEnergy Corp. has filed paperwork with federal regulators stating its intent to sell four natural gas-fired power plants in Pennsylvania, part of the company’s overall strategy to exit the competitive electricity business.
In a Form 8-K filing with the U.S. Securities and Exchange Commission, FirstEnergy subsidiary Allegheny Energy Supply Co. has entered into a non-binding letter of intent to sell its Springdale, Chambersburg, Gans and Hunlock gas plants for $885 million, with the buyer assuming $335 million in debt. The units have a combined net value of about $1.2 billion.
FirstEnergy said it is also selling its ownership interest in the Bath County hydroelectric power plant in Virginia. Constructed in 1985, the Bath County facility located at the Virginia-West Virginia border is the largest pumped storage plant in the world, with a generation capacity of 3,003 megawatts (MW). The ownership stake is included in the total value of the sale.
The Springdale plant currently employs 23 people and produces 639 megawatts MW of electricity. The Gans and Chambersburg plants each have one employee and produce 88 MW, while the Hunlock facility produces 44 MW.
In its filing, the company said it will continue to seek “all alternatives for the remaining generation assets at FirstEnergy Supply and AE Supply, including, but not limited to, legislative efforts to convert generation from competitive operations to a regulated or regulated-like construct.”
The company announced in November that it would be seeking to exit the power generation business in order to become a regulated utility. It pushed to reintroduce utility regulation in Ohio and Pennsylvania, while setting into motion deals to sell or close its large coal and nuclear plants.
“We are not going to wait on those states to decide what they want to do,” Chuck Jones, FirstEnergy CEO, told financial analysts at a November meeting of the Edison Electric Institute, a trade organization.
While requests by FirstEnergy and rival American Electric Power (AEP) to guarantee income for a group of large coal and nuclear plants was approved by state regulators in Ohio earlier this year, the deals were blocked by federal regulators who wanted to be able to review the power purchase agreements, which were made with First Energy and AEP affiliate generators, to ensure prices were fair to consumers.
FirstEnergy is one of the largest investor-owned electric companies in the United States, serving 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York.
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