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Dying Coal- and Nuclear-Powered Utility Asks Again for Government Bailout

In the News
Monday, April 2, 2018

FirstEnergy, a utility struggling to stay alive in the dying coal and nuclear industries, is once again looking for a bailout from government regulators.

Ohio-based FirstEnergy has asked the Department of Energy to take emergency action to keep its coal-fired and nuclear power plants open. The plants can’t compete with cheaper renewable energy and natural gas on the open market. This comes on the heels of the company announcing that it will close three nuclear plants by 2022. 

In a letter to Energy Secretary Rick Perry, FirstEnergy claimed that closing its power plants would jeopardize reliability of the electric grid. Sound familiar?

In November, FirstEnergy and other companies lobbied the Trump administration to bail out their industries by requiring regional grids to buy a percentage of power from coal and nuclear plants, even when less expensive sources are available. The scheme was shot down by the Federal Energy Regulatory Commission.

The bailout was the brainchild of Robert Murray, CEO of Murray Energy, a major supplier of coal to FirstEnergy. Robert Murray was a major donor to President Trump’s campaign, and his wish list set the agenda for many of the administration’s rollbacks of environmental regulations.

Under the Freedom of Information Act, EWG and American Oversight petitioned for release of all communications between Perry and coal and utility companies, including Murray Energy and FirstEnergy. We are still waiting on a response. 

This has nothing to do with maintaining smooth operation of the electric system. It has everything to do with FirstEnergy’s perilous finances. On Monday, FirstEnergy Solutions, the division of the company that sells power on the open market, filed for bankruptcy.  According to Greentech Media, FirstEnergy lost $6.2 billion in 2016.

As before, regional grid operators were quick to dismiss FirstEnergy’s claim that loss of their plants would threaten the reliability of the electric system. PJM, the operator that oversees the largest regional wholesale electricity market in the nation – including the states where FirstEnergy operates – explained:

This is not an issue of reliability. There is no immediate emergency. Diversity of the fuel supply is important, but the PJM system has adequate power supplies and healthy reserves in operation today, and resources are more diverse than they have ever been. Nothing we have seen to date indicates that an emergency would result from the generator retirements.

Asking for a bailout from taxpayers or ratepayers is old hat for FirstEnergy, which has also asked Ohio regulators for help. The company’s bailout proposal in 2016 would have cost ratepayers $4 billion, according to the Institute for Energy Economics and Financial Analysis. State regulators approved the scheme, but federal regulators said no, reasoning that it would have distorted wholesale market prices. 

Many utilities are quick to deride subsidies for solar panels and wind farms, but have no qualms with seeking government subsidies to keep coal and nuclear on life support. In the competition for cheaper, cleaner electricity, coal and nuclear have already lost to solar and wind. FirstEnergy’s deathbed plea is further proof that the era of coal and nuclear power dominance is over.  


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