Dive Brief:

• FirstEnergy on Friday reached a settlement with a broad range of stakeholders that will return all savings from the lower corporate tax rate to customers in Ohio, while allowing the utility to invest $500 million in grid modernization efforts.
• The settlement, which will ultimately return $900 million to customers, is supported by staff of the Public Utilities Commission of Ohio (PUCO), industrial and commercial customer groups, environmental advocates, competitive generation suppliers and others.
• The grid modernization efforts include installing 700,000 smart meters throughout the Ohio Edison, Cleveland Electric Illuminating Company and Toledo Edison service areas, and developing time-varying rates to give customers more bill control.

Dive Insight:

In recent years, environmental advocates have been more accustomed to opposing FirstEnergy's attempts to save uneconomic generation. While those efforts continue on some level, FirstEnergy is moving in other directions, and the Environmental Defense Fund (EDF) says it is eager to work with the utility on ways to make its system more reliable and clean while also lowering costs.

EDF will continue to oppose the utility when necessary, Senior Regulatory Attorney John Finnigan said in a Nov. 9 blog post. 

"But if the utility giant wants to build a cleaner, more modern grid, we are eager to work together," Finnigan wrote. "Case in point: We are pleased to report that we reached an agreement on FirstEnergy's plan to spend $516 million on grid modernization, bringing about lower bills, greater customer choice and less pollution."

The initial phase of the utility's grid modernization plan includes rolling out advanced metering infrastructure, along with tools to allow customer access to energy-use data.

The new smart meters should lower operational costs, which will help reduce rates, according to EDF. And the settlement calls for FirstEnergy to boost efficiency by installing voltage optimization equipment, with a goal of reducing the Ohio grid's energy usage by 4%.

Time-varying rates will allow customers to use electricity during off-peak times when electricity is cheaper, and FirstEnergy has committed to measure the greenhouse gas emission reductions from the clean energy investments.

The agreement also calls for PUCO staff to assess the work FirstEnergy is doing, and the utility has said it will provide reporting and establish a collaborative working group to monitor the plan's implementation. EDF will be represented in the group.

FirstEnergy asked regulators to act on the settlement agreement by the end of this year.

The utility has struggled to keep open some older coal plants, and is preparing for closures. Earlier in the fall, PJM Interconnection completed a reliability study of plant retirements proposed by FirstEnergy's merchant generation subsidiary, FirstEnergy Solutions (FES). The grid operator concluded the shutdowns could proceed without impacting the grid.

FES wants to mothball four fossil fuel plants in Pennsylvania and Ohio in 2021 and 2022, amounting to 4 GW of coal capacity. Earlier this year, PJM also concluded FES could shut down three nuclear plants without threatening reliability.