N.J.'s Top Utility Willing to Take $415 Million Hit to Exit Coal
N.J.'s Top Utility Willing to Take $415 Million Hit to Exit Coal
(Bloomberg) -- Public Service Enterprise Group Inc., the owner of New Jersey’s biggest utility, agreed to sell its stakes in two Pennsylvania power plants at a loss, marking the last steps in its plan to exit from coal.
The deal to sell its stakes -- about 23% each -- in the Keystone and Conemaugh plants is expected to close in the second half of 2019, the Newark, New Jersey-based company said in a statement on Monday. PSEG will take a pretax charge of $375 million to $415 million in the current quarter because the anticipated sale price, which wasn’t disclosed, is less than book value of the assets, according to a filing.
The deals reflect the declining value of coal power. Electricity prices in the region are falling, and costs to control coal-plant emissions are expected to climb, according to Kit Konolige, a utility analyst with Bloomberg Intelligence. That makes the long-term viability of these facilities hard to justify compared with cheap natural gas facilities. Coal is expected to generate less than 25% of U.S. electricity this year for the first time.
“These were plants that they didn’t feel were going to be very valuable in the future,” Konolige said in an interview.
Marijke Shugrue, a PSEG spokeswoman, declined to identify the buyers of the Pennsylvania plants and didn’t comment on the charge related to the sale. After the deal closes, PSEG won’t purchase electricity from them.
PSEG retired two coal plants in New Jersey in 2017 and expects to shutter a 383-megawatt Connecticut facility in 2021. Its stake in the Pennsylvania facilities represents 776 megawatts.
“This marks the last bit of coal that we have in our power portfolio,” Shugrue said by phone Monday.
(Michael R. Bloomberg, the founder and majority stakeholder of Bloomberg LP, the parent company of Bloomberg News, has committed $500 million to launch Beyond Carbon, a campaign aimed at closing the remaining coal-powered plants in the U.S. by 2030 and slowing the construction of new gas plants.)
To contact the reporter on this story: Will Wade in New York at wwade4@bloomberg.net
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Pratish Narayanan, Joe Ryan
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