Bankruptcy plan OK’d for owner of Pleasants Power Station
CHARLESTON — A federal bankruptcy judge has approved the reorganization plan for FirstEnergy Solutions, the spinoff of FirstEnergy Corp. and owners of the Pleasants Power Station at St. Marys.
According to FirstEnergy Solutions, Alan Koschik, a judge with the U.S. Bankruptcy Court for the Northern District of Ohio, on Tuesday, tentatively granted approval to the reorganization plan. A hearing was scheduled before Koschik Tuesday.
FirstEnergy Solutions first filed for Chapter 11 bankruptcy March 31, 2018. Chapter 11 is a tool often used by businesses to reorganize their business structure, to keep their companies operating and to pay debt over time. According to FirstEnergy Solutions, the revised plan — the eighth plan submitted since March 9 — was supported by 93 percent of the company’s creditors.
FirstEnergy Solutions will start to implement the reorganization plan and should emerge out of bankruptcy by the end of 2019.
“This is a landmark day in the history of our company,” said John Judge, president and CEO of FirstEnergy Solutions, in a statement on Tuesday. “We are now in a position to successfully conclude the Chapter 11 process and will emerge from the restructuring as a fully independent energy company well-positioned to continue serving the needs of our 800,000 customers.”
The parent company of FirstEnergy Solutions, FirstEnergy Corp., decided to leave the electrical power generation business by 2018, spinning off its coal-fired power plants to FirstEnergy Solutions and its nuclear power plants to FirstEnergy Nuclear Operating Co.
The Pleasants Power Station, which can produce 31 million kilowatt-hours of electricity daily at full capacity, was built in 1979. It was operated by another FirstEnergy subsidiary — Allegheny Energy Supply — which transferred the plant to FirstEnergy Solutions in 2018 after an attempt to sell the plant to another FirstEnergy subsidiary was blocked by the Federal Energy Regulatory Commission.
FirstEnergy Solutions had planned to deactivate the Pleasants Power Station in December 2018, then pushed the date to May 2022. But Pleasants County Commissioner Jay Powell, representatives of the governor’s office, the power company and lawmakers found a solution to keep the plant open.
House Bill 207, passed by the West Virginia Legislature July 23 during the special session, gives FirstEnergy Solutions a $12.5 million annual break on Business and Occupation taxes to the state. Before the bill passed, Pleasants Power was the only coal-fired plant still paying the B&O Tax due to its status as a merchant power plant. The tax break for the plant kicks in Jan. 1.
The involvement of Gov. Jim Justice in adding the bill to the special session added a wrinkle to the Pleasants Power situation after it was revealed that one of Justice’s companies — Bluestone Energy Sales Corp — was being sued by FirstEnergy Solutions as a part of its bankruptcy filing.
FirstEnergy Solutions alleges Bluestone owes $3.1 million to the power company for excess coal stockpiles Bluestone had agreed to buy back. Attorneys for FirstEnergy Solutions are asking the court to turn over the final payment due by Bluestone and declare Bluestone in breach of contract.
Officials with the governor’s office and with Bluestone — managed by Jay Justice — said the governor had no knowledge of the lawsuit. A deadline for discovery in the proceeding was set for Nov. 15.
FirstEnergy Solutions hopes to use the tax break to make itself more appealing when the Federal Energy Regulatory Commission allows the capacity auction by PJM Interconnection to go forward. According to PJM’s website, the capacity auction allows power companies to bid to supply PJM’s 65 million customers with electricity three years into the future based on predicted demand.
PJM, a wholesale energy transmission company serving 13 states and Washington, D.C., had its 2019 capacity auction delayed several times, most recently in August. The Federal Energy Regulatory Commission halted the auction, calling PJM’s rules unjust and unreasonable.
(Adams can be contacted at firstname.lastname@example.org)