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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--FirstEnergy Corporation (NYSE:FE) (Akron, Ohio), which operates 10 electric utilities and serves 6 million customers in six Midwestern and Mid-Atlantic states, plans to invest at least $7.9 billion over the next three years, mainly in its regulated transmission & distribution (T&D) business, Charles E. Jones, president and chief executive, told the Edison Electric Institute financial conference last November. Including the $2.9 billion of capital investments the utility holding company planned to make in 2016, the company's capital budget for 2016-19 will total about $10.8 billion, he said.
FirstEnergy, which operates one of the largest transmission networks in the PJM (Pennsylvania-New Jersey-Maryland) Interconnection (Valley Forge, Pennsylvania), has more than $20 billion of future investment opportunities in regulated transmission in that reliability region, Jones told the EEI audience.
FirstEnergy (FE) has utility units in several states that have restructured their electricity markets, and the company's legacy coal and nuclear units have not fared well in those competitive markets. The company is engaged in a strategic assessment of its competitive generation business, Jones continued. That assessment, expected to last at least another year, includes potential asset sales, asset closures, restructuring or sale/transfer of assets to a regulated entity.
FE's competitive generation unit operates in the PJM reliability area, which conducts periodic auctions for electric generation. The low-price of natural gas has caused gas-fired generators to win most of those bids to supply electricity. Neither region pays for electric capacity--basically, the ability to generate electricity. The PJM region does not pay for electric capacity -- basically, the ability to generate electricity.
The company's legacy coal units have been a drag on FE's financial performance. It took a $1.5 billion pre-tax asset-impairment and plant-exit charge in its second-quarter 2016 financial statement to reflect deactivating units 1 through 4 of the W.H. Sammis Power Station and Unit 1 of its Bay Shore Power Station, both in Ohio, as well as other costs associated with those deactivations.
Most of FirstEnergy's financial challenges stem from the way its regional grid operator, PJM, wrote the rules for power auctions. Bidders don't get paid for capacity, only energy. There's nothing the Trump administration can do about the PJM rules, or about finalized federal environmental rules like the Cross-State Air Pollution Rule (CSAPR), Mercury and Air Toxics Standards (MATS), Coal Combustion Residuals (CCR) or Effluent Liquids Guidelines (ELG). But the new president's executive order to streamline permitting and regulations for "high priority" infrastructure projects--like electric transmission projects--could expedite some FirstEnergy projects. For more on Trump's executive order, see January 31, 2017, article - Trump Orders Benefit KXL, DAPL and Other 'High Priority' Infrastructure Projects. And the new president's hostility to President Obama's Clean Power Plan, now being litigated in the federal courts, could delay or vacate that rule, which would be welcomed by FirstEnergy and many other coal-burning utilities.
"We continue to make steady progress on our strategic initiatives, while positioning FirstEnergy for stable, predictable, and customer-service oriented growth," CEO Jones said at the time. "At the same time, we have made difficult but necessary decisions to address the continuing impact of challenging market conditions on our competitive business."
Last December, FE subsidiary Mon Power (Fairmont, West Virginia) solicited bids for its 487-megawatt (MW) indirect ownership interest in the Bath County Pumped Storage Project located in Warm Springs, Virginia. The move was occasioned by changes in PJM that diminished the plant's cost-effectiveness. Virginia Electric and Power Company (Richmond, Virginia), a subsidiary of Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) is the majority owner of the station and manages its operation.
Given PJM's brutally competitive wholesale market, FE is choosing to invest in its regulated T&D operations for the next few years. It expects to invest between $4.2 billion and $5.8 billion over 2017-21 in its "Energizing the Future" transmission expansion program. It expects to invest $1 billion in that program this year, and between $800 million and $1.2 billion annually over the 2018-21 period, Jones told the EEI conference last November.
FE plans to invest about $3.9 billion between 2017 and 2019 in its regulated electric distribution business. Those investments follow an investment of about $1.3 billion in that business line in 2016, Jones said.
In its competitive energy business, the company expects to make investments totaling $670 million in 2017 and 2018. FE invested about $540 million in that business unit last year.
The company may have incremental capital investment opportunities in Ohio as part of its grid modernization program, which were not reflected in its planned T&D outlays. In a business plan filed with Ohio regulators, FE's Buckeye State units could invest a total of between $2.2 billion and $3.5 billion over a five-to-eight-year period on advanced metering infrastructure (AMI), distribution automation and VOLT/VAR control. Add to that sum those projects' associated operations & maintenance costs of $1.5 billion to $1.9 billion, and the utility holding company could be investing between $3.7 billion and $5.4 billion over and above its T&D capital budget. The Public Utilities Commission of Ohio (PUCO) (Columbus, Ohio) is scheduled to rule on that application later this year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
FirstEnergy, which operates one of the largest transmission networks in the PJM (Pennsylvania-New Jersey-Maryland) Interconnection (Valley Forge, Pennsylvania), has more than $20 billion of future investment opportunities in regulated transmission in that reliability region, Jones told the EEI audience.
FirstEnergy (FE) has utility units in several states that have restructured their electricity markets, and the company's legacy coal and nuclear units have not fared well in those competitive markets. The company is engaged in a strategic assessment of its competitive generation business, Jones continued. That assessment, expected to last at least another year, includes potential asset sales, asset closures, restructuring or sale/transfer of assets to a regulated entity.
FE's competitive generation unit operates in the PJM reliability area, which conducts periodic auctions for electric generation. The low-price of natural gas has caused gas-fired generators to win most of those bids to supply electricity. Neither region pays for electric capacity--basically, the ability to generate electricity. The PJM region does not pay for electric capacity -- basically, the ability to generate electricity.
The company's legacy coal units have been a drag on FE's financial performance. It took a $1.5 billion pre-tax asset-impairment and plant-exit charge in its second-quarter 2016 financial statement to reflect deactivating units 1 through 4 of the W.H. Sammis Power Station and Unit 1 of its Bay Shore Power Station, both in Ohio, as well as other costs associated with those deactivations.
Most of FirstEnergy's financial challenges stem from the way its regional grid operator, PJM, wrote the rules for power auctions. Bidders don't get paid for capacity, only energy. There's nothing the Trump administration can do about the PJM rules, or about finalized federal environmental rules like the Cross-State Air Pollution Rule (CSAPR), Mercury and Air Toxics Standards (MATS), Coal Combustion Residuals (CCR) or Effluent Liquids Guidelines (ELG). But the new president's executive order to streamline permitting and regulations for "high priority" infrastructure projects--like electric transmission projects--could expedite some FirstEnergy projects. For more on Trump's executive order, see January 31, 2017, article - Trump Orders Benefit KXL, DAPL and Other 'High Priority' Infrastructure Projects. And the new president's hostility to President Obama's Clean Power Plan, now being litigated in the federal courts, could delay or vacate that rule, which would be welcomed by FirstEnergy and many other coal-burning utilities.
"We continue to make steady progress on our strategic initiatives, while positioning FirstEnergy for stable, predictable, and customer-service oriented growth," CEO Jones said at the time. "At the same time, we have made difficult but necessary decisions to address the continuing impact of challenging market conditions on our competitive business."
Last December, FE subsidiary Mon Power (Fairmont, West Virginia) solicited bids for its 487-megawatt (MW) indirect ownership interest in the Bath County Pumped Storage Project located in Warm Springs, Virginia. The move was occasioned by changes in PJM that diminished the plant's cost-effectiveness. Virginia Electric and Power Company (Richmond, Virginia), a subsidiary of Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) is the majority owner of the station and manages its operation.
Given PJM's brutally competitive wholesale market, FE is choosing to invest in its regulated T&D operations for the next few years. It expects to invest between $4.2 billion and $5.8 billion over 2017-21 in its "Energizing the Future" transmission expansion program. It expects to invest $1 billion in that program this year, and between $800 million and $1.2 billion annually over the 2018-21 period, Jones told the EEI conference last November.
FE plans to invest about $3.9 billion between 2017 and 2019 in its regulated electric distribution business. Those investments follow an investment of about $1.3 billion in that business line in 2016, Jones said.
In its competitive energy business, the company expects to make investments totaling $670 million in 2017 and 2018. FE invested about $540 million in that business unit last year.
The company may have incremental capital investment opportunities in Ohio as part of its grid modernization program, which were not reflected in its planned T&D outlays. In a business plan filed with Ohio regulators, FE's Buckeye State units could invest a total of between $2.2 billion and $3.5 billion over a five-to-eight-year period on advanced metering infrastructure (AMI), distribution automation and VOLT/VAR control. Add to that sum those projects' associated operations & maintenance costs of $1.5 billion to $1.9 billion, and the utility holding company could be investing between $3.7 billion and $5.4 billion over and above its T&D capital budget. The Public Utilities Commission of Ohio (PUCO) (Columbus, Ohio) is scheduled to rule on that application later this year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
