Services
Subscribe
Login
Log Out
e-Edition

FirstEnergy CEO says Pleasants power plant sale may happen

The president and CEO of FirstEnergy suggested in an earnings call Wednesday that the company would seek to sell the Pleasants Power Station near St. Marys to its West Virginia subsidiaries — a move that would shift the cost and risk of that coal-powered plant from company shareholders to customers.

The earnings call follows several weeks in which FirstEnergy, the parent company of MonPower and Potomac Edison, has been heavily questioned about its integrated resource plan — a 15-year energy forecast that was filed with the state Public Service Commission earlier this year. That document suggested that MonPower would seek to buy an existing, unnamed coal-fired power plant in the near future.

Two environmental groups, the West Virginia Citizen Action Group and the Sierra Club, suspected that the plan was meant to set up FirstEnergy to shift the Pleasants plant off FirstEnergy’s books and onto MonPower and Potomac Edison ratepayers. The company also submitted a chart to the PSC that had the Pleasants planted listed alongside all of the other power plants owned or contracted by MonPower.

FirstEnergy CEO Charles Jones’ comments Wednesday will likely put to rest any doubt that FirstEnergy will seek to file a case with the PSC in the near future.

“We filed our integrated resource plan with West Virginia,” Jones said on the call. “I think later this year, they’ll start taking a look at it seriously, and it’s up to the West Virginia commission to decide, would Pleasants be the appropriate solution.”

In an April 2016 report by UBS, an investment bank, electric utility analysts suggested FirstEnergy would likely seek to move the Pleasants plant into a regulated marketplace, especially since the company had already spent $650 million on systems to reduce nitrogen oxide and sulfur dioxide emissions from the plant.

But lawyers for the Sierra Club, the Citizen Action Group and the PSC staff have all questioned whether buying another coal-fired plant is the cheapest option for customers, and they’ve asked why FirstEnergy didn’t take into account possible regulations on carbon emissions from power plants. The naming of the Pleasants plant will likely only add to the opposition that has been building in recent months against the resource plan.

On Wednesday afternoon, members of the West Virginia chapter of the Sierra Club delivered more than 100 letters opposing FirstEnergy’s resource plan to the PSC office in Charleston.

That campaign comes less than a week after the three-member PSC rejected a call from the Sierra Club to hold a public hearing on FirstEnergy’s case. The PSC said such an action would be “premature.”

James Van Nostrand, a West Virginia University law professor who has represented utilities in other states, said the fact that FirstEnergy already has the Pleasants plant listed alongside MonPower’s existing electricity sources may suggest company officials created the resource plan — which is supposed to be an objective analysis of future energy markets — so it could justify offloading the Pleasants plant.

“It really throws into doubt the entire process,” said Van Nostrand, who helped push for the resource planning law in West Virginia. “It’s not meant to justify what you already planned to do anyway.”

Still, with regional energy markets being flooded with cheap electricity from natural gas turbines and renewable energy sources that continue to decline in price, Van Nostrand said it makes sense that FirstEnergy executives want to sell the plant to a West Virginia subsidiary.

In the regional market, known as the PJM Interconnection, the plant only makes money if it produces electricity at a cheaper price than other power sources all over the East Coast. If FirstEnergy can get the PSC to approve MonPower’s takeover, however, the company is able to guarantee a profit from West Virginia customer rates.

“FirstEnergy has a fiduciary obligation to maximize return for its shareholders, but that is where the PSC comes in,” Van Nostrand said. “This is a corporate bailout. Bad management decisions should have consequence for shareholders and management.”

According to the FirstEnergy’s website, the Pleasants plant, which started producing power in 1979, is capable of producing 31 million kilowatt hours of electricity daily, or enough to supply around 26,700 homes in West Virginia for an entire month.

The need for such a large increase in electricity production has also been questioned by the groups intervening in the case. While FirstEnergy has suggested demand for electricity in northern West Virginia will increase by 2.2 percent annually, Van Nostrand and others say that type of growth in electricity demand isn’t common even in the fastest growing portions of the country.

FirstEnergy’s resource plan and the lead up to the Pleasants plant actually being named, Van Nostrand said, reminds him of the regulatory process that occurred before MonPower took over the Harrison power plant near Shinnston in 2013 — an acquisition that customers are still paying for.

During that time, the company said it would be able to sell excess electricity produced at the plant onto the regional market, which would help to subsidize the cost of the takeover for West Virginia ratepayers. That setup is kind of like people from other states helping cover the cost of maintaining the West Virginia Turnpike with the tolls they pay while driving through the state.

But that prediction has largely not come to pass because the price of generating electricity from coal plants has become less competitive. So West Virginia customers are required to pay for more costs at the plant than company officials had anticipated.

If a proper integrated resource planning process takes place and FirstEnergy’s analysis is properly vetted, Van Nostrand believes it’s unlikely the company will be able to justify purchasing another coal generating station. He isn’t sure the company had enough evidence in 2013 to justify the purchase of the Harrison plant.

“You couldn’t have had these coal plant purchases approved with a rigorous integrated resource planning process,” Van Nostrand said. “It doesn’t make sense.”

The fact that West Virginia utilities are already over-invested in coal-fired power stations, he said, has ensured West Virginia isn’t reaping the same benefits of other states that have positioned themselves to take advantage of low-priced natural gas.

“I understand politically why these utilities are buying these coal plants,” Van Nostrand said. “But it is creating a coal surcharge for every ratepayer in West Virginia.”

Reach Andrew Brown at andrew.brown@wvgazettemail.com, 304-348-4814 or follow @Andy_Ed_Brown on Twitter.

Show All Comments Hide All Comments

User Comments

More News