November 20, 2017 Read More →

Op-Ed: FirstEnergy Plan for West Virginia Plant Would Have Ratepayers Foot the Bill

Charleston Gazette-Mail:

There’s an old saying that goes, “Fool me once, shame on you. Fool me twice, shame on me.”

The West Virginia Public Service Commission will soon make a decision that reveals whether it has learned that lesson. If not, hardworking West Virginians are in danger of footing the bill.

At issue is FirstEnergy’s proposal to transfer ownership of one of its coal-fired power plants, the Pleasants Power Plant, from one of its subsidiaries to another. While that might not sound like a big deal, it turns out that, if approved, it could cost West Virginians dearly on their monthly electricity bills.

The current owner, Allegheny Energy Supply Co., is a merchant generator in an unregulated market — meaning that it must sell the power it generates to the competitive wholesale market and compete with other resources, like natural gas power plants, to earn profits. On the other hand, Mon Power and Potomac Edison Power, the proposed new owners, are in West Virginia’s regulated market — meaning they get a guaranteed rate of return on their assets — paid for by ratepayers.

If this sounds familiar to you, it should. FirstEnergy just did the same thing in 2013, when it transferred full ownership of the Harrison Power Plant over to Mon Power. At the time, utility executives claimed the plant was needed to meet future demand, and that it had the “potential to significantly reduce customer rates.”

How has that panned out?

According to an analysis by the Institute for Energy Economics and Financial Analysis, the Harrison plant actually cost West Virginia ratepayers an additional $164 million between October 2013 and June 2016. That’s because FirstEnergy based its claim that customer rates would decline on predictions that natural gas prices would rise. That didn’t happen. And so, the Harrison plant continues to produce power at a higher cost than other options for generating power in our region, and ratepayers end up footing the bill for FirstEnergy’s bad move.

In short, it turns out that coal is no longer cheap. And that’s not even accounting for the tremendous public health and environmental problems caused by coal.

If you’ve looked at your electricity bill lately, you’ve seen the evidence that your rates have gone up. According to the Energy Information Administration, residential electricity prices in the state have risen from an average of 9.52 cents per kilowatt hour in 2013 to 11.22 cents per kilowatt hour in 2016 — an 18 percent increase in just three years. Nationally and in the Mid-Atlantic and South Atlantic regions, electricity prices have barely budged.

Judging by the large numbers of West Virginians who have shown up to public hearings to express their opposition to FirstEnergy’s newest bogus proposal, it’s clear that folks are paying attention. They should be, because FirstEnergy’s shell games are costing residents dearly.

I recently helped put together an analysis by the Union of Concerned Scientists that looked at the economic viability of the nation’s coal-fired power plants, compared to cleaner alternatives. Nationally, we found that more than a third of coal-fired electric generating capacity is either more expensive to run than an equivalent natural gas plant or is already slated to be taken offline.

In West Virginia, we found that 12 of the state’s 19 currently operating coal-fired generating units were uneconomic, compared to natural gas. That represented 57 percent of the state’s total electricity generation in 2016. Both the units at Pleasants and all three of the units at Harrison made the list of uneconomic plants.

And interestingly, if you look at a map of the generating units that we found to be uneconomic, you’ll see that the vast majority of them are located in the Southeast — in regulated markets where ratepayers are on the hook if utilities make costly decisions. In deregulated markets, where power plants face competitive markets, many coal-fired power plants have either shut down or utilities have already announced plans to shut them down or convert them to natural gas. Why? Because they can’t compete with cleaner alternatives in the market.

So it’s no wonder that FirstEnergy is playing shell games with power plants, shuffling its coal plants from deregulated to regulated markets. Utility executives know that they can’t make money on the plants in the market, and so they want to hand the bill to West Virginia ratepayers.

Let’s hope the Public Service Commission doesn’t get fooled a second time. Commissioners should fulfill their duty to protect West Virginia’s ratepayers, and reject this proposal outright.

Pleasants Power deal would stick WV ratepayers with uneconomic plant

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