IEEFA Report: FirstEnergy And AEP Model Proposals For Ohio Bailout After West Virginia Strategy

Oct. 21, 2015, CLEVELAND (IEEFA)— The Institute for Energy Economics and Financial Analysis today published a report linking re-regulation proposals in Ohio by FirstEnergy and American Electric Power (AEP) to a strategy first used by the utilities in West Virginia. The report notes that FirstEnergy customers in West Virginia are currently facing a 12.5 percent rate increase to subsidize the first year of this plan.

The Ohio proposals stand to affect about 20 percent of all electricity generation capacity in the state.

The IEEFA Report, “West Virginia Bailout Emboldens FirstEnergy and AEP in Ohio,” describes how the FirstEnergy and AEP proposals are part of a broader electricity industry effort to shift risks from owners of uncompetitive power plants onto ratepayers. The FirstEnergy and AEP proposals are under consideration by the Public Utilities Commission of Ohio (PUCO). The IEEFA report urges PUCO to reject the proposals.

“FirstEnergy and AEP are hoping to do to consumers in Ohio what has been done to consumers in West Virginia,” said Cathy Kunkel, the IEEFA energy analyst who wrote the report. “The proposals before the commission would require ratepayers to pay to support FirstEnergy and AEP’s coal-fired and nuclear plants, which are failing to compete in the markets, rather than benefitting fully from cheaper energy sources and from energy-efficiency initiatives.”

Kunkel noted that most of the power plants in question are aging coal-fired units and that the FirstEnergy and AEP proposals amount to a collective Ohio ratepayer-funded utility-company bailout of several billion dollars over the next 15 years. The FirstEnergy scheme would have ratepayers subsidize the Sammis coal-fired plant, its Davis-Besse nuclear plant and its share of the Kyger Creek and Clifty Creek coal-fired plants. The AEP plan allows ratepayer subsidies for AEP’s share of the Kyger Creek and Clifty Creek as well as the coal-fired Cardinal Unit 1, Conesville Units 4-6, Stuart Units 1-4 and Zimmer Unit 1.

Media contact: Karl Cates 917-439-8225 [email protected]

About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources.