A subsidiary that runs FirstEnergy Corp.'s nuclear and coal-fired power plants has filed for bankruptcy after the utility said earlier it planned to close its three nuclear plants in Ohio and Pennsylvania.
The move announced by FirstEnergy Solutions signals the parent company's plan to get out of the power producing business and concentrate on supplying electricity. The subsidiary, which has been saddled by mounting debt, said in a statement that it's seeking bankruptcy protection to "facilitate an orderly financial restructuring" and believes the filing is in the best interests of the company and creditors.
The filing for bankruptcy protection includes FirstEnergy Solutions, along with all FES subsidiaries and FirstEnergy Nuclear Operating Co., according to the statement.
The company plans to close its Davis-Besse nuclear plant near Toledo in 2020. FirstEnergy's Perry plant near Cleveland, Ohio, and its Beaver Valley operation in Pennsylvania would then close in 2021.
The three plants combined employ about 2,300 people and their closing will shrink the number of operating nuclear reactors in the United States to 96, although Georgia Power is building a couple of new reactors at its Plant Vogtle near Waynesboro, Ga.
At its peak, U.S. utilities operated 103 nuclear units. But the anti-nuclear group Beyond Nuclear claims nuclear power generation is likely to continue to decline as other sources of power are proving cheaper and more reliable for cost projections.
"Nuclear power is dead," said Kevin Kamps, a spokesman for Beyond Nuclear which has sought for years to shut down Davis-Besse. "It's just a question of how much - in terms of impacts on our country's health, safety, environment, and finances - it takes down with it as it dies."
Nuclear power still supplies about 20 percent of all U.S. electricity and nearly 40 percent of the power for the Tennessee Valley Authority in its 7-state region of the Mid-South.
But cheaper natural gas, and the hefty investments required to build and maintain nuclear power, have undercut the price advantage for many nuclear reactors, especially as power demand stagnates.
FirstEnergy's aging and costly fleet of coal and nuclear plants has been unable to compete in recent years with the growing number of natural gas power plants in the East and Midwest.
Donald R. Schneider, president of FirstEnergy Solutions, said the Boards of Directors for FirstEnergy Solutions and FirstEnergy Nuclear Operating Co. determined that the Chapter 11 filing represents "our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief."
FirstEnergy Solutions and its subsidiaries collectively have more than $550 million in cash, which they believe is "sufficient to continue normal operations and meet post-petition obligations to employees, suppliers and customers as they come due," according to the statement.
FirstEnergy first warned it could be forced to close its power plants in Ohio four years ago when it sought to change how it is paid for electricity.
It also has been unable to get financial help from federal and state leaders to keep its nuclear plants operating.
The utility said on March 28 it intended to shut down its three nuclear plants within the next three years.
Akron-based FirstEnergy supplies electricity to about 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York.