FirstEnergy's revised Ohio plant subsidy proposal 'shadow' of original, critics say

Dive Brief:

Critics of power plant subsidies for FirstEnergy generation in Ohio say a revised plan does little more than skirt federal review and is a "shadow proposal" that largely mirrors the utility's first, Midwest Energy News reports.
The Public Utilities Commission of Ohio (PUCO) approved eight-year subsidies in March, but the Federal Energy Regulatory Commission (FERC) ultimately withdrew affiliate waivers that would have enabled the deals. FirstEnergy subsequently withdrew the power purchase agreements and filed a new proposal.
But critics, including environmental groups and the Electric Power Supply Association, say FirstEnergy simply replaced PPAs with a “virtual power purchase agreement" that maintains customer surcharges and otherwise has the same impacts.

Dive Insight:

Is FirstEnergy's revised power subsidy proposal any different than an original plan struck down by federal regulators? Opponents say no, calling it a "shadow version" of the company's original plan that has the same impacts with less oversight.

“It’s a classic sort of sleight of hand,” Environmental Defense Fund's Dick Munson told Midwest Energy News. “My guess is that FERC will see through the sham. It’s just illegal affiliate dealing.”

The utility's new plan would replace affiliate power purchase agreements covering 3,256 MW with "virtual" PPAs covering at least 3,200 MW, while still keeping monthly surcharges to customer bills as part of its rate plan. The surcharges would avoid review by the FERC. But the changes were too similar to the originial, critics said.

"It is important to bear in mind that the Virtual PPA is a shadow version of the Affiliate PPA," critics told FERC, pointing out in their filing that the company asked Ohio regulators to approve the proposal based on the case's previous record.

FERC had sided with the critics in the two orders rescinding waivers it had granted to American Electric Power and First Energy, allowing them to purchase power from their affiliate generators. In their ruling, FERC said consumers are captive because they cannot avoid charges associated with the PPAs by switching providers.

The previous power purchase agreements covered FirstEnergy's Davis-Besse Nuclear Power Station in Oak Harbor and the W.H. Sammis coal-fired plant in Stratton, as well as a portion of the output of Ohio Valley Electric Corporation units in Gallipolis, Ohio, and Madison, Indiana.

Opponents of the plan want FERC to require the proposed Virtual PPA to be filed under the Federal Power Act, because FirstEnergy companies will still be selling capacity to affiliates. "The Virtual PPA still involves a wholesale power sale, albeit of capacity only," they argued.

The revised plan would have a similar impact to the original, adding about $3.6 billion to customer bills, according to the Office of the Ohio Consumers’ Counsel.