Andre Porter, the new chair of the Public Utilities Commission of Ohio, made headlines a couple of weeks ago when he said utilities have got to “stop attempting to scare Ohioans.”
Porter’s admonition was noted by Columbus Business First reporter Tom Knox in response to an op-ed in the Plain Dealer by FirstEnergy CEO Chuck Jones, where he made it sound like the very well-being of Ohio is at risk if FirstEnergy doesn’t get the expensive ratepayer-subsidized bailout it’s asking for in a case before the PUCO. The commission’s hearings on the proposed bailout begin today.
Jones in his column said that without the bailout FirstEnergy would be “forced to charge our customers billions more for interstate extension cords that leave our economy vulnerable.” He raised the specter of “electricity price spikes” and the bogeyman of “Ohio losing its energy independence“
Porter, recently appointed by Gov. John Kasich, countered by telling Knox that in fact the end is not near. “We’re going to continue to have reliable power,” he said. “We’re going to continue to have cost-effective services. So stop attempting to scare Ohioans.”
FirstEnergy’s fear mongering is understandable. After all, it’s worked before and it may work again. “Scaring Ohioans” is a perfect description of a tactic FirstEnergy has used for many years in its quest to raise rates and squelch competition.
AND THAT’S NOT COUNTING SEVERAL TRULY SCARY, UNPLANNED SITUATIONS THE UTILITY HAS BEEN RESPONSIBLE FOR, INCLUDING A NUCLEAR NEAR-ACCIDENT at its Davis Besse plant and the blackout that cut power to 50 million people in North America in August 2003.
Let us count some of the ways FirstEnergy has deliberately scared Ohio regulators, legislators, and customers to get what it wants:
- In 1999, when Ohio deregulated electricity, FirstEnergy scared the Ohio Legislature into giving it a $6 billion bailout for cost overruns at its Davis-Besse and Perry nuclear plants. The money came from a surcharge added to the bills of everyone in FirstEnergy territory, meaning customers did not get the full advantage of lower rates that should have resulted from deregulation.
- FirstEnergy fought implementation of the 1990 Clean Air Act requirements for its four coal-fired power plants on Lake Erie for 20 years, claiming the laws were too burdensome, and thus allowing mercury and other pollutants to be released virtually unchecked. Finally, in 2012, FirstEnergy announced it would close the plants rather than spend the money to upgrade equipment to comply with the well-established pollution-control laws. The company, as a result, received a windfall in “reliability must run” payments from the regional transmission authority (PJM) to keep the plants available for the grid until they finally closed this year.
- In 2012, FirstEnergy once again took to fear mongering—a particular specialty of then-CEO Anthony Alexander—in its campaign to turn back the clock on Ohio’s law that set standards for energy efficiency and renewable energy. The company told lawmakers thes standards would cause electric rates to skyrocket and harm small businesses and residential customers. Legislators ended up enacting a freeze on the standards, which are now being reviewed by a study committee.
- In 2014, before the ink was even dry on the renewables freeze, FirstEnergy asked PUCO for a bailout of several of its struggling coal-fired electric plants, including the W.H. Sammis plant, and the company’s stake in the Kyger Creek and Clifty Creek plants, and the Davis-Besse nuclear plant (once again), buttressed by the doomsday arguments Jones made in his Plain Dealer piece this month.
Our research at the Institute for Energy Economics and Financial Analysis shows that the root of FirstEnergy’s current set of financial problems was its decision to merge with Allegheny Power in 2011, putting way too many eggs in the basket of coal-fired power plants at the worst possible time. It has only itself to blame for making those ill-fated judgments.
The Office of the Ohio Consumers’ Counsel says this proposal will cost ratepayers $3 billion. All kinds of Ohioans—from business groups like the Ohio Manufacturers Association Energy Group and the Retail Energy Coalition to citizen organizations like Ohio Citizen Action and the Sierra Club to large aggregation customers like the Northeast Ohio Public Energy Council have come out against the bailout proposal.
The PUCO hearings are expected to last for four weeks. Sometime after that we’ll all find out whether FirstEnergy’s scare tactics have finally run their course.
Sandy Buchanan is IEEFA’s executive director.
