PSEG Power has agreed to sell its stakes in two coal plants in western Pennsylvania, leaving the energy supplier with only one coal unit in its fleet and that due to retire in two years.
Terms of the transaction, expected to close during the second half of 2019, were not disclosed. PSEG Power owns a 24 percent interest in the 776-megawatt generation facilities.
With the announcement, PSEG Power eliminates a noncore asset and is one step closer to completing its coal-exit strategy; the remainder of the company’s coal-generating facilities have been sold or scheduled for early retirement.
The company shuttered its last two coal plants in New Jersey in Mercer and Hudson counties in June 2017, and properties were sold off to developers last year. PSEG Power also announced the early retirement of a 383-megawatt unit in Bridgeport, CT.
Over the past few years and leading up to 2021, PSEG will have retired or exited through sales over 2,400 megawatts of coal-fired generation, reflecting an industry-wide trend of closings, largely brought about by competition from cheap natural gas.
Even though it is the 17th-largest U.S. power producer, the company ranks third among power suppliers with the lowest carbon-emissions rates, according to a report issued last week that sought to benchmark air emissions of the 100 largest electric-generating facilities.
That ranking is largely a reflection of its operation of the Salem and Hope Creek nuclear power plants and part ownership of the Peach Bottom nuclear unit in Pennsylvania. Public Service Enterprise Group, PSEG’s owner, also is focusing growth on its utility, Public Service Electric & Gas, which now accounts for nearly three-quarters of its profits.
“They have been on a trend of growing their regulated investments and reducing exposure to their merchant-power risk,’’ said Paul Patterson, an energy analyst at Glenrock Associates.
PSEG Power had threatened to close its nuclear plants in New Jersey unless the state provided lucrative subsidies to keep them open, which the company won this past April. The state approved $300 million a year in so-called zero-emission certificates (ZECs) funded by utility customers across the state.
“To a certain extent, the ZECs help out with that trend by providing the company with a steady stream of revenue,’’ Patterson said.