Duke moves to stop FirstEnergy Solutions from exiting Ohio co-op

Dive Brief:

Consumer advocates are worried that a bankruptcy court decision allowing FirstEnergy Solutions (FES) to withdraw from the Ohio Valley Electric Corporation (OVEC), which operates a pair of coal plants, could wind up raising prices for retail consumers.
Both OVEC and Duke Energy of Ohio, which owns a part of the power cooperative, have filed for a rehearing of the decision in the U.S. Bankruptcy Court of the Northern District of Ohio, Eastern Division. Both also requested the appeal be moved out of bankruptcy court and into the U.S. District Court for the Northern District of Ohio.
FES filed for Chapter 11 bankruptcy protection earlier this year, as its parent company, FirstEnergy Corp., sought to transform itself into a fully-regulated utility company. The court's decision allowing FES to exit OVEC could avoid almost $60 million in annual payments to support the co-op's power plants.

Dive Insight:

The court ruling is a step forward for the FES bankruptcy case, but consumer advocates warn that it poses a potential blow to ratepayers.

The court had ordered a preliminary injunction in March, allowing FirstEnergy's competitive generation subsidiary to withdraw from OVEC, but the final order issued Aug. 9 triggered immediate appeals by OVEC and Duke. Dayton Power & Light and American Electric Power are also among OVEC's owners.There are several other appeals pending in other parts of the case as well, including one by the Federal Energy Regulatory Commission.

In May, the Ohio Consumers’ Counsel (OCC) objected to FES being allowed to reject a power purchase deal and exit the cooperative, warning that the move could drive up costs for customers of utilities owning shares in OVEC.

"If the Court approves rejection, retail consumers would likely face higher rates for electricity. Rejection would shift the financial costs of the OVEC Contract from FES and [FirstEnergy Generation] to those least (or not) responsible for the costs — retail consumers," OCC wrote in its objection.

OCC did not sign on to certain provisions in the court's Aug. 9 order allowing FES to leave OVEC and retained the ability to pursue further action to protect consumers. "Nothing contained in this order shall waive any rights of the OCC to object to charges to consumers by OVEC or its members," the order said.

The consumer advocate declined to comment for this story.

The OVEC arrangement is one part of a larger bankruptcy. Last month, Exelon Corp., announced that it intends to purchase FirstEnergy Solutions' retail power business for $140 million.