Buyer tentatively found for Gans, three other power stations
FirstEnergy’s Allegheny Energy Supply unit has signed a letter of intent to sell for $885 million four power generating plants, including the 88-megawatt Gans plant in Springhill Township, Fayette County.
FirstEnergy is not releasing the name of the buyer at this time. According to a filing with the Securities and Exchange Commission, “The anticipated purchase price of $885 million would include the assumption of $305 million of unsecured debt by the buyer (and) $580 million in expected proceeds.”
The unsecured debt would come from AE Supply’s notes due in 2019 at a 5.75 percent interest rate and those due in 2039 at a 6.75 percent interest rate.
“On Dec. 1, 2016, AE Supply signed a letter of intent to sell its Springdale, Chambersburg, Gans and Hunlock gas facilities (in Pennsylvania), together with the competitive portion of the Bath hydroelectric facility (in Virginia), to a third party buyer,” said Stephanie Walton, an external communications spokesperson for FirstEnergy in Akron, Ohio.
Gans is a 16-year-old facility that gets 44 megawatts apiece from two units, on five acres of a 39-acre tract south of Uniontown.
Gans is gas-fueled as are the other facilities being offered in the deal, a five-unit, 638-megawatt operation at Springdale along the Allegheny River northeast of Pittsburgh; another 88-megawatt operation at Chambersburg in Franklin County; and the 44-megawatt Hunlock Creek operation in Luzerne County.
“This non-binding agreement is part of FirstEnergy’s previously announced plans to transition away for its competitive generation business,” Walton continued. “If AE Supply enters into a definitive agreement in this transaction, the closing would be subject to various closing conditions, including regulatory approvals and the receipt of third party consents.”
FirstEnergy also is parent company for West Penn Power. The Gans, Springdale and Chambersburg plants are within its coverage area, while Hunlock Creek is in the territory of FirstEnergy’s Penelec subsidiary.
“The potential impact on employees would be subject to negotiations if the sale moves forward,” Walton said. “Electricity produced by these plants is competitively bid into the wholesale energy market, which sets energy prices based on a variety of factors.”
Earlier, FirstEnergy said it planned over a 12- to 18-month period “to identify how we can thoughtfully yet expeditiously move away” from power generation in Ohio, Pennsylvania, West Virginia and Virginia.
Separately, FirstEnergy said in its SEC filing, AE Supply expects to market its interest in the Buchanan generating facility, another gas-fired, 88-megawatt operation near Oakwood in the western end of Virginia.
It also reiterated its plant to offer its coal-fired 1,300-megawatt Pleasants plant on the Ohio River at Willow Island, W.Va. Previously, FirstEnergy CEO Charles E.Jones said his company’s Monongahela Power subsidiary planned to request proposals for the Pleasants station.
“We do not believe competitive generation is a good fit for FirstEnergy and our regulated growth strategy,” Jones said during a conference call summing up his company’s third-quarter earnings.
Walton said FirstEnergy is exploring “a variety of strategic alternatives” such as “converting generation to a regulated or regulated-like construct, seeking solutions for nuclear units that recognize their environmental benefits, exploring the sale of additional generation assets or moving forward with additional deactivations.”
Jones said in two recent venues that he wanted to preserve the jobs of those “who dedicated their careers to keeping the units operating safely and efficiently” at the four units on the block as well as two other Pennsylvania operations, the 2,490-megawatt, coal-fired Bruce Mansfield and 1,815-megawatt, nuclear-powered Beaver Valley facilities at Shippingport along the Ohio River in Beaver County.
Walton said previously that FirstEnergy’s regulated utility business is separate from its competitive generation business.
“Therefore, there is no relationship between this announcement and the company’s proposed rate plans,” the FirstEnergy spokeswoman said.
FirstEnergy is seeking from the Pennsylvania Public Utility Commission what would average out to be a 7.2 percent rate hike for residential customers, down from an original 9.64 percent earlier this year. A PUC spokesman said a final decision on that rate case is due by Jan. 27.