Charleston Gazette Mail:
MonPower and Potomac Edison insist their request to purchase the Pleasants Power Station from fellow FirstEnergy subsidiary Allegheny Energy Supply is the best option for the companies and their ratepayers, citing low cost, a better chance to avoid costly penalties and local economic benefits.
However, advocacy groups such as West Virginians for Energy Freedom have said the purchase would shift the financial risk of the coal-fired power plant from investors to West Virginia customers, who already have experienced several rate increases in recent years. They argue using a coal-fired power plant would be costlier than relying on the region’s cheaper supply of natural gas.
The Pleasants purchase request has been anticipated since FirstEnergy CEO Charles Jones told investors in earnings calls that the company soon will exit the competitive energy market and sell the Pleasants plant to a West Virginia-based subsidiary, which would put the plant in a regulated market where they are guaranteed a profit.
The companies said in their filing that the shift to a regulated market would be beneficial, but is not a primary reason for the purchase request.
The main reason for the Pleasants purchase, according to the filing, is to address the companies’ projected capacity shortfall of more than 1,400 megawatts by 2027. In December, the companies filed a request for proposal (RFP), required to obtain additional capacity, seeking 1,300 megawatts of power, the same amount the Pleasants plant generates.
The companies’ main argument that the plant would address a capacity shortfall isn’t a compelling enough reason for the transaction, according to Cathy Kunkel, an energy analyst with the Institute for Energy Economics and Financial Analysis (IEEFA). She said the companies already have enough in their energy supply to meet customer demand until 2030, but since they are measuring for peak capacity, the need seems greater than it actually is.
There would be more efficient ways to address capacity demand in the coming years, she added.
“They say the potential problem is in capacity demand,” Kunkel said. “I don’t know why you’d have to buy a coal-fired plant to do that. You could buy a peaking power plant [which only run when demand is high] or do some type of demand-response program.”