FirstEnergy CEO Chuck Jones told investors Wednesday there was an increased likelihood that nuclear plants such as Davis-Besse and Perry will not be able to operate through the end of their useful lives, due to the inability of energy companies to receive needed legislative or regulatory support.
Jones made his remarks during a FirstEnergy Corp. webcast to investors concerning the company's fourth quarter earnings in 2017.
Jones said FirstEnergy's unregulated subsidiary, FirstEnergy Solutions, has an approximately $100 million bond payment due April 2, and while he can’t speak for FES, he expects them to file for bankruptcy prior to that date.
FirstEnergy spokesperson Tricia Ingraham said Jones wasn’t speaking of specifically the Perry and Davis-Besse plants, but the entire FES entity.
FirstEnergy has said it would be forced to close or sell the Davis-Besse Nuclear Power Station in Ottawa County and other plants operated by FES unless state officials changed energy regulations to make it financially feasible to keep the plants running.
Hanging in the balance are about 700 full-time, high-paying jobs and tens of millions in tax dollars that Davis-Besse generates for the surrounding community, including schools, police and fire departments.
Communities in Lake County are already seeing funding decreased for public entities like surrounding schools, county-funded programs, and law enforcement because of the uncertainty of Perry's future.
FirstEnergy spokesperson Jennifer Young told the News-Messenger Feb. 14 that the energy company is still working through the strategic review process for its Davis-Besse and Perry plants, with no date set for announcing their possible sale or closure.
The Federal Energy Regulatory Commission ruled unanimously in January to reject U.S. Energy Secretary Rick Perry's plan that would have established a tariff mechanism to provide for the purchase of energy from an eligible "reliability and resilience resource" and the recovery of costs and a return on equity for such resources, according to the FERC ruling.
Ottawa County officials had hoped that a FERC approval of Perry's proposal could result in financial help, including possible federal loan guarantees, to FirstEnergy that could stave off a possible closure of the Davis-Besse plant.
Jamie Beier Grant, executive director of the Ottawa County Improvement Corporation, said last week that the FERC issued a follow-up directive in January to respond within 60 days with more detailed data on key attributes of reliability and resiliency to the nation's grid system.
She said the Ohio Senate Public Utilities Committee took additional testimony a few weeks ago on Senate Bill 128, the Zero Emissions Nuclear legislation that local officials hope could, if passed, help FirstEnergy keep its nuclear plants open in Ohio.
Charles Fishman, an equity analyst for Chicago-based Morningstar, Inc., wrote a report about the status of regulatory help for FirstEnergy Solutions in September.
In a section of the report titled, "Finding a Buyer for FES' Assets: Too Little, Too Late," Fishman wrote that state-sponsored financial support for FES' merchant nuclear and coal-fired plants in Ohio and Pennsylvania was unlikely and that federal support would be too little, too late.
He said Morningstar thought FES would file for bankruptcy in 2018.
"The only thing that has really happened since this report is the FERC decision not to support baseload power plants in the short-term," Fishman said in an email to The News-Messenger on Wednesday. "Although FERC is reviewing the grid resilience issue, I continue to believe it will be too little and too late to help Davis-Besse (and) most of FES' coal plants."
Fishman added that the only thing he thought could save Davis-Besse and Perry at this point is a buyer that believes natural gas prices and power prices will be higher in the long run.
"That is going to be tough to find," Fishman said. "Davis-Besse is a small one-unit nuke. I believe it will be retired in the next few years. Perry is larger and might survive. It really depends on natural gas prices."
