July 15, 2019 / 7:28 PM / 3 months ago

LS Power will not expand Ohio gas plant if state subsidizes nuclear power

    July 15 (Reuters) - U.S. electric generator LS Power said on
Monday it would be forced to terminate development of an
expansion of its Troy gas-fired power plant in Ohio if the state
passes legislation to subsidize nuclear energy.
    There are two nuclear reactors in Ohio - Davis Besse and
Perry. The plants' owner, FirstEnergy Solutions, said it would
shut the money-losing reactors in 2020 and 2021 unless the state
provides some financial assistance to keep them operating.
    FirstEnergy Solutions is a bankrupt unit of Ohio power
company FirstEnergy Corp       .
    The problems facing FirstEnergy Solutions' reactors are not
unique to Ohio. In recent years, Illinois, New York, New Jersey
and Connecticut have subsidized their reactors to keep them
operating because they provide large amounts of carbon-free
energy, thousands of jobs and taxes.
    Growing supplies of cheap gas from shale fields like the
Marcellus and Utica in Ohio have depressed electricity prices in
competitive markets nationwide over the past several years,
making it uneconomical for generators to keep operating some
nuclear- and coal-fired plants.                          
    "Handouts to nuclear plants jeopardize the economics of the
other already economic generators, including the Troy facility,
which could chill investment and lead to the unintended
consequence of reduced reliability for Ohio's electric
generation fleet," LS Power said in a release.
    LS Power estimated it would spend over $500 million to add
about 500 megawatts to the Troy plant, creating hundreds of
construction jobs and around 20 permanent positions.
    The Ohio Senate Energy and Public Utilities Committee is
scheduled to meet on Monday to resume debate on the nuclear
subsidy bill, House Bill 6, which passed the State House of
Representatives in May.
    The House version would provide an overall reduction in
consumer power rates by weakening the state's renewable and
energy efficiency goals even though FirstEnergy Solutions would
receive an estimated $150 million a year from 2020-2026 to keep
its reactors in service.
    Officials at FirstEnergy Solutions were not immediately
available for comment.
    On July 1, FirstEnergy Solutions said it would work with the
state to keep the reactors in service even though its June 30
deadline to purchase fuel for Davis Besse elapsed without
passage of a bill.             
   The company said it wants a nuclear bill by July 17 when the
full Senate is scheduled to be in session. Analysts at Height
Capital Markets in Washington, D.C., however, said that was
likely just a tactic to keep pressure on the legislature. 
    FirstEnergy Solutions has warned that shutting the reactors
could result in the loss of 4,300 jobs.             

 (Reporting by Scott DiSavino; Editing by Steve Orlofsky)
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