FirstEnergy Solutions Corp. (FES) announced it plans to deactivate four fossil-fuel powered electric plants in Ohio and Pennsylvania in 2021 and 2022.
In a press release announcing the closures, FES said it was shuttering the plants because the current government-regulated market structure does not adequately compensate generators for the electricity reliability and fuel security the plants provide.
The plants to be deactivated include the coal-fueled Eastlake 6 generating unit in Eastlake, Ohio; one coal and one diesel unit at the W. H. Sammis power plant in Stratton, Ohio; and the Bruce Mansfield coal-fueled power plant in Shippingport, Pennsylvania.
Closing these power plants will reduce the states’ electric generating capacity by 4,017 megawatts (MW).
Says Resilience, Security Undervalued
Under the current regulatory structure, electricity prices don’t reflect the resilience and reliability fossil-fuel power plants provide to the power grid, says Don Moul, president and chief nuclear officer of FES Generation Companies, in FES’s press release.
“Our decision to retire the fossil-fueled plants was every bit as difficult as the one we made five months ago to deactivate our nuclear assets,” said Moul. “As with nuclear, our fossil-fueled plants face the insurmountable challenge of a market that does not sufficiently value their contribution to the security and flexibility of our power system.
“The market fails to recognize, for example, the on-site fuel storage capability of coal, which increases the resilience of the grid,” Moul said.
If the federal government adopts policies compensating fossil fuel power plants for their contribution to grid security and reliability, plans to deactivate these power plants could be reversed or postponed, the press release states.
Not Calling for Subsidies
The closure of FES’s coal-fueled power plant in Pennsylvania is part of an ongoing trend caused by government policies, says Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation and a policy advisor to The Heartland Institute, which publishes Environment & Climate News.
“I don’t think anyone is surprised the Mansfield coal plant in Pennsylvania is closing,” Stelle said. “The question now is, what, if anything, should the government do about it?”
Stelle says Pennsylvania lawmakers have considered bailing out soon-to-close nuclear power plants but not coal power plants, and at the federal level the Trump administration has floated funding mechanisms to keep both types of power plants open.
“We have a couple of nuclear plants also scheduled for closure in the next five years, but I don’t think giving them subsidies to keep them open is a good approach,” said Stelle. “Lawmakers are understandably concerned about the loss of jobs, but subsidies only result in higher costs for repairs and litigation, and they also potentially stall the development of new, more efficient forms of energy which could actually produce more energy jobs in the future.
“Earlier this year, there was a discussion at the federal level concerning how to change the pricing for coal and nuclear energy to value their reliability, resulting from the fact coal and nuclear plants can large store large amounts for their fuel supply on site for use during emergencies or natural disasters, which can’t be done with natural gas and renewable energy,” Stelle said.
Expensive Mandates
Pennsylvania’s renewable energy mandate has also contributed to FES’s decision to close its fossil-fuel power plants, says Stelle. Ending those mandates would reduce energy costs and help level the electric power market playing field, Stelle says.
“Pennsylvania’s renewable portfolio standard mandates 18 percent of all electricity be generated by renewable energy sources by 2021,” said Stelle. “This is significant, and the costs are quite high, with one 2016 study finding renewable mandates raise Pennsylvanians’ energy costs by $700 million and will result in the elimination of 11,400 jobs by 2025.
“The proper government response should not be to create new subsidies, but instead for Pennsylvania to get rid of the current subsidies and mandates which are distorting the market, so we have a truly open playing field in which the least expensive energy sources become the most prevalent,” Stelle said.
Warns Against ‘New Distortions’
Greg R. Lawson, a research fellow at The Buckeye Institute, says governments should end their artificial support for renewable power sources instead of subsidizing fossil fuel power plants.
“There are real consequences to local communities when power plants close, as jobs are lost and schools take a hit to their tax base, but the best long-term solution is a growing economy which creates jobs and opportunities for those affected,” Lawson said. “Introducing new distortions in the energy marketplace makes this harder to achieve, by increasing costs of energy to all types of consumers: residential, commercial, and industrial.
“Buckeye’s 2017 report on the impact of renewable portfolio standards on Ohio’s economy showed such subsidies make Ohioans worse off,” Lawson said. “Rather than creating new subsidies which further distort the electricity market, policymakers should work to eliminate all subsidies and let different power plants compete on a level playing field. This would be good for Ohio and Ohioans.”
Kenneth Artz ([email protected]) writes from Dallas, Texas.
INTERNET INFO
Orphe Divounguy et al., “Economic Research Center Analysis: The Impact of Renewable Portfolio Standards on the Ohio Economy,” Buckeye Institute, March 3, 2017: https://heartland.org/publications-resources/publications/economic-research-center-analysis-the-impact-of-renewables-portfolio-standards-on-the-ohio-economy
Artz has more than 20 years’ experience in nonprofit organizations, publishing, newspaper reporting, and public policy advocacy.
