Dive Brief:
- PSEG Power announced Monday that it has reached a deal to sell its 776 MW interest in two western Pennsylvania coal plants to an undisclosed buyer for an undisclosed price. The deal is expected to close in the second half of this year.
- Parent company Public Service Enterprise Group has been working to decarbonize, and now says it has one of the lowest carbon emissions rates among large power producers in the United States.
- The coal exit comes with a potential cost, however: PSEG Power told the U.S. Securities and Exchange Commission that it could take a loss of $375 million to $415 million on the sale of the plants.
Dive Insight:
PSEG's decarbonization efforts are showing dividends, but the most recent efforts have come with a hefty price tag.
In a Form 8-K filing, the company told regulators it expects to recognize a one-time pre-tax impairment charge in Q2 2019 related to the transaction, "as the anticipated sale price is less than the current book value."
A PSEG spokesperson declined to comment on the buyers or the pricing.
The sale of the Keystone and Conemaugh plant interests is "the latest step in PSEG Power's long-term strategy, which includes eliminating non-core assets and moving away from coal-fired generation," the company said in a statement.
In October 2016, PSEG Power announced the retirements of its Hudson and Mercer coal-fired generating stations, in New Jersey, comprising 1,252 MW. The company also plans to retire its 383 MW coal unit in Bridgeport, Connecticut, in 2021.
"Over the past few years and leading up to 2021, PSEG will have retired or exited through sales over 2,400 MW of coal-fired generation," the company said.
According to a recent CERES analysis, PSEG is the 17th largest power producer in the United States, but ranks third-lowest in carbon emissions among privately/investor-owned producers.
PSEG's generation is currently 61% nuclear, 27% gas and 10% coal.
Renewable generation is just 1%, but the company says it is working to change that. PSEG has invested $1.7 billion in 625 MW of solar, including 211 MW in New Jersey and almost two dozen projects in 14 states totaling 414 MW.
PSEG Chairman, President and CEO Ralph Izzo also says the company will be looking to resources outside of generation to meet customer needs.
"As we look toward a lower carbon future, common sense — and economics — dictate that energy efficiency and innovative new business models will play increasing roles," Izzo said in a statement.
