Dive Brief:

• Staff of the Public Utility Commission of Ohio have proposed a new rider in FirstEnergy’s bid to support struggling coal plants, possibly charging customers $131 million annually for grid modernization efforts, RTO Insider reports. 
• But critics say the utility has not proposed any modernization projects, and the new fees would simply amount of a bailout of the company's older generation.
• In May, FirstEnergy asked regulators to eliminate purchase agreements for several plants, while still adding monthly surcharges to customer bills as part of its rate plan. The surcharges would avoid review by the Federal Energy Regulatory Commission (FERC), which blocked the agreements.

Dive Insight:

PUCO staff is recommending approval of FirstEnergy's proposed rider, but critics are calling it just another way the utility is seeking a bailout of several power plants.

“If the Commission wants to achieve the worthy goal of modernizing the grid, it must require that any customer money provided to FirstEnergy under the Staff’s proposed rider be invested in grid modernization,” Earthjustice Managing Attorney Shannon Fisk said in a statement. “Unfortunately, it appears that Staff’s proposed rider would instead just bail FirstEnergy Corp. out of its bad coal investments.”

In March, Ohio regulators approved agreements to support aging coal and nuclear plants owned by FirstEnergy, but FERC subsequently blocked the arrangement. That has sent FirstEnergy back to state regulators to seek support. The original deal covered the utility's Davis-Besse Nuclear Power Station in Oak Harbor and the W.H. Sammis coal-fired plant in Stratton. The utility's proposal also includes a portion of the output of Ohio Valley Electric Corporation units in Gallipolis, Ohio, and Madison, Indiana.

In testimony filed by PUCO staff, analyst Joseph Buckley said he "believes the long-term financial health of [FirstEnergy] will have benefits for the Ohio Regulated Distribution Utilities, as well as the State of Ohio in general."

According to Earthjustice's analysis of the rider proposal, staff has recommend that regulators reject a modified FirstEnergy proposal and instead approve a “Distribution Modernization Rider.”

The rider would charge customers $131 million annually for three to five years in order to provide credit support to the utility. But the advocacy group said the rider does not appear to require that the fees be spent on distribution modernization.

“The proposed grid modernization effort outlined in Staff’s testimony lacks any detail.  Furthermore, the grid modernization plan filed earlier this year by FirstEnergy speaks to initiatives that the company is already undertaking and any future investment decisions are deferred to a collaborative process that is ill-defined in terms of its objectives and timeline,” said Dan Sawmiller, senior campaign representative for Sierra Club's Beyond Coal Campaign.

“Staff’s recommendation is effectively to bail out FirstEnergy for poor investment decisions related to coal-fired power plants.  While Sierra Club supports transition planning that protects electricity customers and Ohio’s working families, FirstEnergy’s customers aren’t getting that with this recommendation," Sawmiller said.