The Institute for Energy Economics and Financial Analysis (IEEFA) has published a report titled "Private equity in PJM: Growing risks for communities." The report evaluates the escalating risk to communities that are home to private equity (PE)-owned fossil fuel plants.
A press release from IEEFA reveals that PJM is the country's largest power market, supplying energy to entire or parts of 13 states, including Ohio, Pennsylvania, West Virginia, New Jersey, Maryland, and Virginia, as well as the District of Columbia. However, over the past decade, there has been a significant increase in PE-controlled generation capacity. At present, these firms own roughly 60% of all fossil fuel generation within PJM.
The IEEFA press release further explains that due to limited financial oversight and financial pressure, PE and private groups have the potential to abruptly shut down a facility. This leaves communities grappling with the aftermath such as job losses and diminished tax revenue. An example of this was witnessed at the Homer City coal plant in Pennsylvania which closed in July after its PE owners issued a 90-day notice. With a shift from fossil fuel to renewable generation already taking place along with stricter emissions standards, more closures are anticipated.
"Communities that host the region’s aging coal-fired power plants are particularly at risk, with job and tax losses occurring already. The transition away from fossil fuel generation resources is under way. Local and state leaders need to be planning now for those plants’ closures," said Dennis Wamsted, an IEEFA energy analyst and author of the report.
According to another IEEFA press release, this report is the third installment in a three-part series. The first two reports were "Private equity in PJM: Growing financial risks" and "Private equity in PJM: New risks for limited partners, private capital."
