Dive Brief:
- FirstEnergy won't get an answer from Ohio regulators on whether they will guarantee income from a fleet of the company's coal and nuclear plants before the PJM capacity auctions in May, Midwest Energy News reports. But critics are still concerned that the utility's plan will crowd out other resources in future market auctions.
- FirstEnergy wants regulators to guarantee sales from the Davis-Besse Nuclear Station, the W.H. Sammis coal plant and two other coal facilities. Duke and AEP have similar requests before the Public Utilities Commission of Ohio. FirstEnergy says consumers could save $2 billion under the proposal.
- Critics are concerned, however, that having subsidized plants bid into the capacity markets would be unfair and leave less room for other resources like natural gas and wind power.
Dive Insight:
Critics of the FirstEnergy proposal say new generation resources will be unfairly disadvantaged in PJM power markets if Ohio regulators approve guaranteed income proposals for a slate of coal and nuclear plants owned by Duke, FirstEnergy and AEP.
If the plants have their costs covered, the critics argue, they will be able to bid into market auctions at lower prices than new generation resources. PJM rules require some new resources to name a price when entering into capacity market auctions, but there's more flexibility for existing generation. As long as they knew the final clearing price would be above what they offered from their plants, Midwest Energy News explained, FirstEnergy could bid into the markets at zero.
In the end, that would mean more coal and nuclear in the PJM fuel mix, and less of cleaner energies like natural gas and wind, critics charge. They say the capacity markets are more fair when income isn't guaranteed to the old plants.
“You just don’t have fair competition when you have to compete against somebody with such a complete subsidy," a spokesman for PJM Power Providers Group, a FirstEnergy competitor, told Midwest Energy News.
