FirstEnergy Corp. has decided that residential customers are as unpredictable as the weather, so it is stopping new sales to them effective immediately.
The Ohio-based energy company is reshuffling the customers in its competitive segment — which includes FirstEnergy Solutions, an electricity supplier that competes with utilities — to give residential, commercial and industrial clients better rates.
This doesn’t impact existing contracts nor does it affect customers that buy their electricity through the utility, known as the provider of last resort.
The newly unattractive customers are residents, small- and medium-sized businesses, and some large commercial and industrial clients whose electricity demand tends to sway with the weather and therefore exposes FirstEnergy Solutions to the volatile prices that accompany snowstorms and heat waves. Plus, these clients are expensive to recruit, the company said.
It’s about “derisking our business,” said Diane Francis, a spokeswoman with FirstEnergy.
“With residential customers, when it’s cold their electricity demand goes way up. Most industrial customers [have] very steady demand, very predictable,” she said.
Meanwhile, FirstEnergy’s Pennsylvania utilities, including West Penn Power, have just filed for rate increases. For West Penn Power, this is the first rate case in 20 years. If its proposal is approved by the Pennsylvania Public Utility Commission — that’s not expected to happen until April 2015 — average monthly bills for residential customers will increase 14.7 percent from $92.47 to $106.09.
As it has been for the past several quarters, Marcellus and Utica shales appear to hold promise for FirstEnergy’s customer growth in its desired segments.
“For 2014, FirstEnergy continues to expect an increase in industrial sales, with a majority of that increase resulting from shale gas activities. Additionally, FirstEnergy expects growth in the industrial sector beyond 2014 for potential shale gas projects. As new gas fields are developed, the opportunity for additional manufacturing expansion could further support growth,” the company said in its public filing.
FirstEnergy also announced Tuesday that it would delay planned capital improvement projects at two of its largest and most critical power plants in Pennsylvania – Bruce Mansfield coal-fired power station and the Beaver Valley nuclear power station, both in Shippingport, Beaver County.
Bruce Mansfield needs a dewatering facility, which takes about two years to build and must be in operation by the end of 2016. That’s when the company’s Little Blue Run impoundment, which is used to store coal ash waste, must close.
FirstEnergy said it’s deferring the project because Bruce Mansfield was not picked as a baseload generation resource in the latest regional grid auction in May, which secured capacity for 2017-18. Some of its units did not clear previous auctions, the company revealed Tuesday.
Before FirstEnergy spends the money to upgrade the facility, it wants to see the results of another auction scheduled to take place next month and, if those results aren’t conclusive, it might wait until next year’s auction in May.
At this point, FirstEnergy is not considering closing Bruce Mansfield, said Stephanie Walton, a spokeswoman for the company. For now, the question of the dewatering facility is a when, not an if, she said. Still, any delays in the decision will mean that the coal-fired power station will have to be put out of service in 2017 until the dewatering facility is finished.
At Beaver Valley, FirstEnergy is postponing replacing the reactor head and steam generator at Unit 2 from 2017 until 2020. The company said it can do that safely and get costs under control as it decides how to allocate capital in the future.
Anya Litvak: email@example.com or 412-263-1455.