Dive Brief:

• FirstEnergy has reached a 16-party settlement in its bid to guarantee income to one coal and one nuclear-fired power plant in Ohio, shortening the duration of the controversial proposal to eight years from the original 15 and including bill credits that begin in the fifth year of the arrangement, Columbus Business First reports. 
• American Electric Power, which proposed a similar arrangement for four of its coal-generating facilities, is expected to meet with stakeholders today, in a bid to reach its own settlement. AEP has sought income support for the entire remaining life of the plants.
• FirstEnergy's plan will cost ratepayers about $3.25 more per month in the first year of the power purchase agreements, but is expected to save more than $560 million over the life of the arrangement. A number of stakeholders did not sign onto the agreement and responded with sharp criticism for the deal.

Dive Insight:

FirstEnergy filed a settlement on Tuesday with Ohio regulators that shortens the length of proposed power contracts that the company says are necessary to keep two of its aging power plants online.

While the company was able to win support from some large business power customers that originally opposed the PPA deal, a number of critical stakeholders refused to sign on and remain "irate as ever," according to Columbus Business First. 

Both FirstEnergy and AEP, which wants similar income guarantees for aging coal plants, say the supports are necessary to preserve reliability, keep power prices stable, and prevent Ohio from becoming too dependent on natural gas. Opponents argue that grid operator PJM has projected no reliability problems in the near future and that utilities should be meeting future demand with efficiency and renewables, rather than by preserving fossil fuel generation.  

Backers of the FirstEnergy agreement say the deal would find middle ground with shorter contracts, emissions goals and credits for customers.

"The proposed settlement is expected to deliver significant benefits to customers, protect thousands of family-sustaining jobs and vital tax revenues in Ohio communities, and provide for a cleaner energy future," Charles Jones, FirstEnergy President and CEO, said in a statement.

The deal also "illustrates that a wide variety of parties support FirstEnergy's proposal and agree that it will serve the best interests of Ohio electric customers," he added. Eight-year terms on power purchase agreements will ensure a diverse set of fuel sources, "rather than risking more plant closures and building costly transmission to import out-of state energy sources that put Ohio at greater risk of higher prices in the years ahead."

Opponents are still not pleased with FirstEnergy's revised proposal, calling it a "bad bargain" for customers and a "bailout" for the company.

“This backroom deal between FirstEnergy and the [PUC] Staff remains an unreasonable bailout of aging power plants that places customers at risk of losing billions of dollars,” said Shannon Fisk, Managing Attorney at Earthjustice, which represents Sierra Club in the proceeding. “Rather than transitioning Ohio to a more competitive and cleaner energy system, this deal simply adds meaningless window dressing to a legally flawed proposal."

"We will fight this bailout to its ultimate defeat before the Commission or, if necessary, in court," he said in an email.

The arrangement includes power generated by the Davis-Besse Nuclear Power Station in Oak Harbor, Ohio; the W.H. Sammis Plant in Stratton, Ohio; and a portion of the output of Ohio Valley Electric Corporation (OVEC) units in Gallipolis, Ohio, and Madison, Indiana.

In the first year of the deal, an average residential customer will pay about $3.25 more per month for the rate provision during the first full year, but FirstEnergy says customers are projected to save more than $560 million over the plan's eight-year term as retail power prices.

SNL reports the FirstEnergy utilities have also agreed to a customer credit for bill stability beginning after the fifth year of the program, beginning at $10 million and increasing by another $10 million anually through the PPA's life. And the settlement also sets a goal to reduce carbon dioxide emissions in FirstEnergy's six-state footprint by at least 90%, relative to 2005 levels, by 2045.

The settlement, which is expected to be voted on next year, includes FirstEnergy's Ohio utilities – Ohio Edison, The Illuminating Company and Toledo Edison – and was signed by 16 parties, including the state regulatory staff, EnerNOC, and Ohio Partners for Affordable Energy, a low-income customer advocacy group.