Coal Goes To The Birds

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from Bloomberg Businessweek,

First Energy, a utility in Akron, is making a risky bet on the past.

Until recently, FirstEnergy, a utility in Akron, favored rate deregulation. FirstEnergy, which serves 6 million customers from western Ohio to the Jersey shore, relies on coal-fired power plants that once offered some of the cheapest electricity in the region. The company benefited from wholesale competition among generators. Today, with cheap natural gas undercutting coal, FirstEnergy has decided government price supports may not be so bad after all. Its coal plants “just aren’t making money in the open market,” says chief spokesman Todd Schneider. “What we’re talking about is reregulation to preserve stable prices and reliable service for our customers.”

FirstEnergy’s predicament offers a window on nationwide turmoil in the energy industry. In addition to competition from natural gas and increasingly cost-efficient wind and solar power, coal-fired plants face proliferating climate rules reducing carbon dioxide emissions—most notably the plan President Obama unveiled on Aug. 3 requiring states to cut emissions by almost a third by 2030. Some utilities are meeting challenges with innovation. Goaded by a New York state program, Consolidated Edison is overhauling its business model to accommodate rooftop solar arrays and neighborhood “micro grids” that allow individuals, apartment buildings, and businesses to share the electricity they generate and even sell some of it back to the utility.

FirstEnergy, by contrast, has doubled down on coal. Its latest proposed rate plan would ensure the purchase of particular plants’ output, no matter how high the cost. This would save its W.H. Sammis coal-fired plant north of Steubenville, as well as the company’s share of coal power from the Kyger Creek plant in southeast Ohio and the Clifty Creek plant in Indiana. Customers also would underwrite the purchase of what’s generated by FirstEnergy’s Davis-Besse nuclear plant on Lake Erie.

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