U.S. power company FirstEnergy Corp (FE.N) urged the federal government on Thursday to evoke little-used emergency powers to help it keep several struggling nuclear and coal-fired power plants open, a move critics blasted as an attempt at a corporate bailout.
FirstEnergy's FirstEnergy Solutions unit called on U.S. Energy Secretary Rick Perry to use the emergency powers to order PJM Interconnection, the regional power grid operator, to negotiate a contract that would compensate owners of coal and nuclear plants for the benefits such as reliability and jobs those units provide.
On Wednesday, the company said it would shut several nuclear plants in Ohio and Pennsylvania in the next three years without some kind of relief.
PJM, in response, rejected the need for an emergency order to help FirstEnergy. "Nothing we have seen suggests there is any kind of emergency from these units retiring," said Vincent Duane, senior vice president at PJM, calling the problem "fundamentally a corporate issue."
Coal and nuclear power plant operators have struggled in recent years as low natural gas prices from the shale boom have spurred utilities to retire dirtier coal plants. Last year, Perry proposed a plan that would subsidize coal and nuclear for providing what is known as base-load generation, which refer to units that run around the clock.
However, U.S. regulators rejected that proposal in January, and said they would conduct a study on grid resilience. Many grid operators, including PJM, have said they already factor in reliability of their systems and the fuel resources available to generate electricity.
FirstEnergy said in November 2016 that it would exit the competitive generation business overseen by FirstEnergy Solutions as natural gas has taken up a greater part of the power load.
On Wednesday, FirstEnergy Solutions said it told PJM it would retire all of its nuclear reactors in Ohio and Pennsylvania, totaling 4,048 megawatts (MW), in 2020 and 2021.
One megawatt is enough power for 1,000 U.S. homes.
FirstEnergy said it wants an emergency order because the power grid's reliability is threatened, due to the "premature retirement of plants that have many years of useful life but cannot operate profitably under current market conditions."
PJM said, however, that FirstEnergy's assets "have been financially stressed for some time."
The U.S. Department of Energy said it received FirstEnergy's request and will now go through its standard review process, but it did not comment further. PJM said such a request, if granted, would effectively circumvent the Federal Energy Regulatory Commission, putting it in "uncharted waters."
The use of emergency orders related to power generation has been minimal, having been evoked only eight times since December 2000, according to the Energy Department, usually in response to natural disasters or blackouts.
Advanced Energy Economy, a efficient energy trade group, called the move a “blatant appeal” by FirstEnergy for a corporate bailout.
“This outrageous attempt to evade established market procedures is unprecedented,” said Malcolm Woolf, senior vice president of policy for AEE.
Other companies have sought assistance from federal, state and regional officials to keep their coal and nuclear plants in service, and some states, including New York and Illinois, have offered subsidies to nuclear plants.
These companies argue that the diversification of fuel sources is necessary to keep the power grid operating in the most optimal way. More coal plants are expected to be decommissioned in coming years, and natural gas recently surpassed coal as the biggest source of power generation in the United States.
Most states are also putting rules in place to boost generation through renewable sources.