City mayors, state regulators, residential solar groups, energy efficiency organizations, natural gas companies and other regional electric producers are lining up against FirstEnergy’s plan to sell the Pleasants power plant to its West Virginia subsidiaries without seeking bids for other sources of power.
Since the beginning of the year, officials with FirstEnergy have been under fire for suggesting that the company was going to sell another coal-fired power plant to MonPower and Potomac Edison customers in the near future.
At first, the Akron-based utility company declined to say whether it had any particular coal plant in mind, but its executives later admitted to investors that the company would like to offload the plant into the West Virginia utility market, where the company is guaranteed a profit.
Now, the coal-laden utility finds itself up against a diverse and growing group of organizations that don’t believe the state’s Public Service Commission should allow the company to shift the risk of the power plant off of investors and onto West Virginia electric customers without proving that it is the lowest cost option for consumers.
The groups opposing the sale of the Pleasants plant, located near St. Marys, have said FirstEnergy’s plan is “ripe for commission review.”
They have suggested that FirstEnergy is trying to “circumvent” a legal settlement from 2013, which allowed MonPower to take over the Harrison power plant north of Clarksburg for $1.1 billion but required it to seek bids for future energy needs.
Morgantown Mayor Marti Shamberger, Lewisburg Mayor John Manchester and about a dozen other groups sent a letter to the PSC earlier this week pleading with the three-member commission to not allow FirstEnergy to use the same strategy it did in 2013 to sell the Harrison plant to MonPower.
“We’ve been here before. In 2013, Mon Power purchased the Harrison power plant from an affiliate company,” the group letter said. “This transaction — between corporate affiliates with the same parent company — amounted to a ratepayer bailout of the affiliate company.”
A study released by the Institute for Energy Economics and Financial Analysis, a liberal research group, last month found that transaction cost West Virginia electric customers $164 million since 2013.
“West Virginia residents are counting on you to do the right thing,” the groups added. “Make Mon Power bid out its electricity needs so that we can get the lowest price for our electricity.”
FirstEnergy’s lawyers have told the commission that opening up competitive bids for new energy sources would “usurp” the company’s decision making. They have said that commission should not be seeking to “micromanage” the company’s utility operations.
But with FirstEnergy losing millions of dollars because of the closures of uncompetitive coal-fired power units in Ohio and Pennsylvania, other groups are questioning the company’s motives.
The PSC staff said they were concerned that FirstEnergy was trying to “foist” the Pleasants plant onto West Virginia electric customers because the utility is “hemorrhaging money” in the competitive energy markets.
The parent utility company, which operates companies in six states, lost $1.1 billion in the second quarter of 2016 alone.
“Given the desperation of the parent, can Monongahela Power and The Potomac Edison refuse the parent company’s desire to unload this currently undesirable asset even though it is probably not the correct thing to do for ratepayers?” PSC staff members asked.
All of this comes at a time when new gas-fired power stations are coming online throughout the United States and parts of West Virginia, and electricity from renewable energy continues to drop in price.
As a result, West Virginia’s natural gas industry, the PJM Power Providers and Electric Power Supply Association, which represents companies investing in various power stations throughout the northeastern United States are also calling for an open bidding process.
“Electricity generation in the United States is in the early stages of a fundamental transition, as America’s percentage of electricity derived from natural gas is now and will continually increase substantially,” lawyers for the Independent Oil and Gas Association of West Virginia said in documents filed with the PSC.
The comments by IOGA, which represents numerous gas companies in West Virginia, highlights the very real competition that is playing out in the energy industry throughout the United States, as the percentage of electricity coming from coal-fired units continues to decline.
“The commission should adopt practices and policies which give the natural gas industry an opportunity to compete and participate in electricity generation opportunities going forward,” IOGA’s lawyer said.
“West Virginia has numerous large electric generating facilities, the majority of which use coal as the principal fuel source,” IOGA’s lawyer added. “Even if EPA’s Clean Power Plan is not implemented, the EIA projects that Appalachian coal production will decrease.”
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