Dive Brief:
- Talen Energy this week reported net Income of $151 million, compared with $96 million for the first quarter of 2015, and the company's chief had some tough words on subsidies being considered for what it describes as "uneconomic" generation in Ohio, SNL Energy reports.
- Talen President and CEO Paul Farr said power markets are working, but cheap gas and emissions regulations have slashed profits for some generators.
- The company also declined to comment on rumors of a potential sale. Bloomberg reported last week that Riverstone Holdings LLC was making a bid for the generator.
Dive Insight:
FirstEnergy's bid for subsidies at some of its struggling power plants will impact wholesale markets, however the deal is structured, Talen Energy CEO Farr said in an earnings call with reporters and analysts.
If the plants cannot turn a profit without subsidies, "then those units should shut. The market worked just fine," he said.
After FERC nixed power purchase agreements approved by Ohio regulators to support aging coal and nuclear plants owned by FirstEnergy and AEP Ohio, FirstEnergy revised its proposal. The utility is now proposing a bill surcharge through its distribution rates, which would avoid federal scrutiny. Ohio regulators have granted rehearing.
"Maintaining a level playing field among competitors is an essential element to having well structured, transparent and functioning markets that encourage sensible investments in existing and new generation resources," Farr said.
Farr also declined to comment on rumors of a potential sale. Riverstone currently owns 35% of the company, which was formed by merging assets owned by the private equity group with PPL Corp.'s generation assets. Bloomberg reported last week that a sale could be in the works, with Riverstone acquiring the rest of the company.
Farr told reporters and analysts that "before we get in the Q&A session, given recent market rumors involving the company, I want to take the opportunity to remind you that we do not comment or speculate on market rumors. We never have and we never will."
