Dive Brief:
- FirstEnergy and opponents of its power plant subsidy deal approved by Ohio regulators on March 31 have filed petitions for a rehearing of the case before the Public Utilities Commission of Ohio (PUCO). The decision, which also involved AEP, guaranteed income for eight years for seven aging coal plants and one nuclear plant that were uncompetitive in interstate electricity markets.
- FirstEnergy filed a proposal late Monday with regulators that would eliminate the power purchase agreements for the 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 proposed PPAs last week.
- Opponents of power subsidies in Ohio have filed rehearing requests arguing, among other points, that state law does not authorize regulators to force customers to subsidize merchant power plants, the Associated Press reports.
Dive Insight:
Monday was the deadline for parties to file requests for rehearing in the Ohio power subsidy case, and both FirstEnergy and its opponents want a do-over for very different reasons.
FirstEnergy, the Plain Dealer reports, wants to pull the proposed PPAs that were rejected by FERC, but keep monthly surcharges on customer bills that came with the PPAs. However, the surcharges would no longer be based on wholesale power prices, but on the company's own estimated power production costs filed with regulators over 18 months ago.
In the bill rider program, "actual MWs cleared in the PJM capacity market will be replaced with the MWs projected to clear" future market PJM auctions. FirstEnergy argues this is only a small change, and that its forecasting for generation projected to clear market auctions "is already evidence of record and relied upon by the Commission in this case." But it would have at least one big consequence: Circumventing a review of the deal by FERC.
Last week, FERC blocked the guaranteed PPAs for both FirstEnergy and AEP, saying the companies must first prove they are not abusing the affiliate relationship between their generators and regulated utility arms. But if the surcharges are not based on wholesale market prices, which fall under FERC's jurisdiction, there would be nothing for the agency to review under the modified plan, according to the Plain Dealer.
FERC's move to put the deal on ice came as a disappointment to both companies, but less serious for AEP, which has said it plans to sell the plants in question. Critics of the subsidy decision, many of whom also filed for a rehearing, panned FirstEnergy's move to alter its deal.
“FirstEnergy’s latest gambit underscores that its bailout proposal has nothing to do with protecting customers or preserving Ohio generation, and everything to do with propping up corporate profits,” Shannon Fisk, Managing Attorney at Earthjustice, wrote to Utility Dive in an email. “We urge PUCO to reject FirstEnergy’s transparent attempt to evade federal review of an illegal bailout that FirstEnergy acknowledges would cost customers at least $363 million in the first 31 months alone.”
Earthjustice, representing the Sierra Club, filed a petition with PUCO yesterday seeking rehearing of the March 31 approval. The group is arguing that Ohio law did not allow the deals to be approved; regulators relied on outdated forecasts; the subsidies would fail to stabilize rates; and both the Sammis and Davis-Besse plants wold ultimately be retired anyway, despite the plan to save those generation assets.
Other groups, including the Ohio Consumers' Counsel and the Ohio Manufacturing Organization, also filed requests seeking rejection of the plant subsidies.
The deal covered FirstEnergy'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.
For AEP, the deals cover 2,671 MW from nine AEP generating units — Unit 1 at the Cardinal coal plant, Units 4-6 at the Conesville plant, Units 1-4 at the Stuart plant and Unit 1 at Zimmer. The PPAs would also cover the utility's 423 MW contractual share of Ohio Valley Electric Corp. generation.
The companies are expected to look to Ohio lawmakers now to save older generation, pressing for the state to re-regulate its power markets after 15 years of competition.
Ohio Sen. Bill Seitz (R) has introduced a bill that mirrors a proposal floated by AEP last year. The bill would, among other things, financially pressure net metering customers to select the utility for its generation source or potentially relinquish some net metering benefits.
