FirstEnergy officials on Wednesday outlined the utility company’s plans, which include building transmission to meet growing demand and replace aging infrastructure as well as potentially constructing several gas-fired power plants in West Virginia.
FirstEnergy’s updated capital expenditure plan includes $19 billion in transmission investments, a 35% increase from its previous plan, Brian Tierney, FirstEnergy chairman, president and CEO, said during a fourth-quarter earnings call. The plan translates into 10% annual rate base growth over five years, he said.
Earlier this month, FirstEnergy’s Monongahela Power and Potomac Edison utilities asked the West Virginia Public Service Commission for permission to build a 1.2-GW, gas-fired power plant in Maidsville, West Virginia. The $2.5 billion project — part of the utilities’ integrated resource plan — isn’t included in FirstEnergy’s spending plan, according to Tierney.
Akron, Ohio-based FirstEnergy expects the PSC to rule on the proposal in the second half this year, Tierney said. If approved, the project would increase FirstEnergy’s annual rate base growth to 11% from 10%, he said. The plant is slated to come online in late 2031.
In an effort to meet state policy, FirstEnergy will seek to build additional generation in West Virginia to support data centers, if the current proposal is accepted, according to Tierney.
West Virginia is the only state where FirstEnergy utilities operate that is open to utility-owned generation, Tierney noted.
“That's why we would strongly consider and look forward to applying for a second unit and maybe a third and maybe a fourth if things continue the way they are in West Virginia,” Tierney said. Those resources could be dedicated to data centers, he said.
Currently, FirstEnergy is seeing relatively little data center activity in West Virginia compared to other states. Its utilities have 4.1 GW of contracted data center load and they have a 12.9-GW pipeline through 2035, including 7 GW in Ohio, 5.2 GW in Maryland, 2.4 GW in Pennsylvania and 1.2 GW in New Jersey and West Virginia apiece, according to the company’s earnings presentation.
Each gigawatt of new data center load will require about $250 million in spending on FirstEnergy’s transmission system, according to Jon Taylor, FirstEnergy’s chief financial officer.
FirstEnergy expects its weather-adjusted sales will grow 2.2% a year over the next five years, driven by 5% annual industrial sales growth.
FirstEnergy seeks DOE loan
FirstEnergy aims to finance half of its gas-fired project with a loan from the U.S. Department of Energy, according to Taylor. A low-cost DOE loan would save customers more than $200 million over the 30-year life of the loan compared to traditional financing, he said.
Mon Power and Potomac Edison have asked the PSC to be allowed to collect revenue from its customers while the gas-fired power plant is being built, Taylor said. That would cover about 15% of the power plant’s costs and FirstEnergy would likely issue equity to cover the remaining 35% of the costs, he added.
Despite FirstEnergy’s planned infrastructure buildout, the company is focused on keeping electric bills affordable, according to Tierney.
FirstEnergy, for example, supports the PJM Interconnection’s plan to extend price caps on its capacity auction results, but those caps should go further, Tierny said.
“It would be beneficial to our customers to even lower those caps for existing generation, and we've been supportive of things like a second auction that would bring new generation to the fore, which is what's needed,” Tierney said.
FirstEnergy expects bill increases by its utilities will be below the inflation rate over the next five years, according to Tierney.
FirstEnergy’s utilities have about 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York.
