Duke Energy to leave wholesale power market - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Duke Energy to leave wholesale power market

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Duke Energy announced it will exit the wholesale electricity business in the Midwest, a process that will include selling a gas-fired power plant in Ohio near Huntington.

Duke's decision came a few days after the Public Utilities Commission of Ohio denied the company's request for a rate increase.

The sale involves 13 power plants. None are in West Virginia, but two are close to the state's border. One is at Hanging Rock, Ohio, along the Ohio River about 25 miles from Huntington. The other is at Masontown, Pa., on the Monongahela River about 20 miles north of Morgantown.

Other plants are along the Ohio River and are familiar to people who drive that way from Huntington to Cincinnati: Killen, Stuart, Zimmer and Beckjord. All burn coal, and Beckjord also burns oil.

The reason the company gave for leaving the wholesale business is volatility. In a quarterly conference call with investment analysts on Feb. 18, Duke President and CEO Lynn Good said the volatility in the unregulated wholesale market challenged the company's ability to earn consistent and fair returns for its investors.

Duke Energy, the nation's largest electric power holding company, will remain in regulated markets.

Steve Young, Duke's executive vice president and chief financial officer, said the company estimates the book value of the plants to be $3.5 billion, but Duke expects to sell them for $1 billion to $2 billion less than that.

Good and Young said they expect the transaction to close sometime next year.

According to Bloomberg News, the market price for wholesale electricity in the PJM Interconnection service territory, which includes West Virginia, has fallen nearly 50 percent since the 2008 recession as industrial demand has lessened and as low-cost natural gas has taken market share from coal-fired generation.