News Column

Sierra Club calls FirstEnergy plan 'bailout' for old, dirty coal plants

August 6, 2014

By Betty Lin-Fisher, The Akron Beacon Journal



Aug. 06--An environmental group is blasting FirstEnergy Corp.'s proposed electricity pricing plan, calling it a way for the Akron-based utility to bail out its coal plants and make consumers pay.

"FirstEnergy is just reaching so deep into people's pockets," said Daniel Sawmiller, senior campaign representative for the Sierra Club's Beyond Coal campaign. "They are propping up old, obsolete coal plants."

The Sierra Club on Tuesday launched a "No Coal Bailouts" advertising campaign with eight curbside kiosk ads in Columbus calling out utilities for keeping outdated coal plants in operation by charging electricity customers in pending cases before the Public Utilities Commission of Ohio.

The ad campaign was mostly in response to previous plans filed by two other electric utilities, AEP and Duke Energy, but Sawmiller said FirstEnergy's proposal is worse. The Sierra Club is considering expanding its advertising campaign to Akron streets, he said.

On Monday, FirstEnergy, the parent of Ohio Edison, filed a three-year Electric Security Plan (ESP) that would establish electric rates for customers from June 1, 2016 through May 31, 2019. As part of that plan, the company also proposes a 15-year "Economic Stability Plan," which would come with three years of increases to the average residential customer, followed by 12 years of projected savings for customers.

The company estimated that consumers would save $2 billion over the 15 years.

First-year projected increases for the average residential consumer would be $42, followed by charges of $26.52 in the second year and $2.64 in the third year. Credits over the next 12 years range from $24 to $53.52 annual, averaging $35.73.

The plan includes an agreement for FirstEnergy Corp. to purchase power from FirstEnergy Solutions' facilities at a cost that includes a 11.15 percent rate of return, which is included in the projected charges and savings to customers.

Purchased power then would be sold on the wholesale markets. Customers would receive either a credit or a charge, depending on whether there's a profit or a loss on the sale of electricity.

Company officials say the plan helps stabilize long-term pricing volatility in the electricity market by helping consumers avoid large swings in pricing in later years.

It also protects jobs at the Davis-Besse and Sammis plants, both FirstEnergy Solutions-owned operations, and at Ohio Valley Electric Corp., which is jointly owned by several utilities, including FirstEnergy, said Don Moul, vice president of commodity operations for FirstEnergy Solutions.

The plan preserves $1 billion in annual statewide economic benefits and an estimated 3,000 direct and indirect jobs, the company said.

Moul acknowledged that while FirstEnergy Solutions gives up the potential profit on sales, the plan "provides some certainty for our baseload plants ... they continue to operate and jobs continue in Ohio."

Sawmiller expressed concern that after potential environmental plant upgrades in the first three years -- the same period customers see increased charges -- the utility would say it's too expensive to operate the plants and close them before customers would reach the savings years.

Moul said Davis-Besse and Sammis have been upgraded in recent years and are not plants that would be uneconomic to keep open. Still, Moul acknowledged that no one knows what type of federal upgrades might be required, and there's not a way to estimate possible costs. As part of its plan, FirstEnergy intends to ask the PUCO for permission to pass along environmental upgrade costs to consumers, Moul said.

The Ohio Consumers' Counsel, the state's residential utility advocate, on Monday released a statement saying that 1.9 million customers paid billions of dollars to FirstEnergy for its transition to deregulated power plants in 1999, and now, 15 years later, the company is asking consumers to pay similar charges again.

On Tuesday, OCC spokesman Scott Gerfen said the agency continues to analyze the proposal.

"FirstEnergy's requests include asking the government (the PUCO) to guarantee profits for what are deregulated power plants whose profits should instead be determined by the electricity market. Needless to say, we are concerned for consumers. We are analyzing FirstEnergy's new request, including its claim that there will be future cost savings. We then will make recommendations on behalf of consumers to the PUCO," he said.

FirstEnergy said the proposed plan also would freeze distribution rates through May 31, 2019, and provide $5 million a year for the Community Connections program for low-income customers and $1 million in economic development assistance for businesses seeking to come to Ohio.

The utility has asked the PUCO to approve the plan by April 8.

Separately, FirstEnergy reported second-quarter earnings of 15 cents per share on $64 million, compared to a loss of $164 million or 39 cents for the same period a year ago. Shares closed up $1.23 at $31.93.

Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty.

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(c)2014 the Akron Beacon Journal (Akron, Ohio)

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Source: Akron Beacon Journal (OH)


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