Massive Sammis Plant Temporarily Idled by Weak Economy, Low Gas Prices

---

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The massive W.H. Sammis Power Station has temporarily stopped producing electricity, a victim of the weak Mid-Atlantic economy and low gas prices. The coal-fired, base-load plant, located in Stratton, Ohio, will go back online when demand for electricity strengthens in the region and prices rise, Mark Durbin, a spokesman for FirstEnergy Corporation (NYSE:FE) (Akron, Ohio), told Industrial Info in an interview.

Ironically, Sammis is one of the cleanest coal-fired power plants in the Midwest. FirstEnergy installed about $1.8 billion of environmental control equipment at the plant over 2005-2010. The plant fully complies with the recent Mercury and Air Toxics Standard (MACT) rule from the U.S. Environmental Protection Agency (EPA) (Washington, D.C.), Durbin said, adding Sammis would only require "minor changes" to fully comply with the EPA's Cross-State Air Pollution Rule (CSAPR). That rule was vacated by a federal appeals court this summer. Until CSAPR is revised and finalized, its predecessor rule, the Clean Air Interstate Rule (CAIR) remains in effect.

"In PJM, our market, we are at near historically low process for electricity," Durbin said. "Right now, electricity is priced below what it costs us to make it at Sammis. If we can get a price for our product that makes sense, we will operate it. If not, we won't. In a slow economy, we do what we have to. As some point, we expect the economy to come back, but we don't know when."

In mid-September, Durbin said Sammis' status was changed from "baseload" to "economic dispatch," meaning it will operate only when market prices for electricity exceed its operating costs. Sammis will need three-day advance notice from the Pennsylvania-New Jersey-Maryland Interconnection (PJM) to bring the plant online. All seven coal-burning units at the 2,233 megawatt (MW) Sammis plant are affected by the change in status. The plant burns an estimated 6 million to 7 million tons of coal per year.

Weak demand for electricity was the biggest single factor that has temporarily idled Sammis, Durbin said, though low natural gas prices also have reshaped the competitive environment in which the Sammis plant operates.

Durbin said no other FirstEnergy generating station was changing status, though he did add, "We are continuing to evaluate the market, and as changes are required, we'll make decisions based on those conditions."

The Sammis plant employs about 440 people. About 100 of those still work at the plant, while the others have been deployed at other FirstEnergy facilities, Durbin said, adding there have been no job losses from the change in Sammis' status.

But the same can't be said of employment elsewhere at FirstEnergy. Last month, in a development that was separate from the change in Sammis' status, the utility holding company said it was "conducting an organizational study to align its work force to best meet the challenges of the continued weak economy." The results of the study will be announced next month, but FirstEnergy estimated about 200 people would lose their jobs. Most of them work at the company's Akron, Ohio, corporate headquarters.

In a mid-September statement on likely job cuts, Anthony J. Alexander, FirstEnergy president and chief executive officer, said: "This effort is in response to a combination of economic factors, including continued slow customer load growth and an abundance of electric generation supply, resulting in low power prices. While this is a difficult step to take, it is part of our ongoing efforts to meet these economic challenges head-on and ensure the company is positioned for long-term growth and success."

"Today's market requires us to be nimble and adapt quickly to changes," Durbin told Industrial Info. "Is it an ideal situation? Obviously not."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.