Shareholders for FirstEnergy saw the company lose $1.1 billion over a three month period earlier this year, and executives with the coal-laden electric utility have announced that many of their power plants can’t keep up in competitive energy markets.
So as the Akron-based company looks to stop the bleeding, they are eyeing West Virginia in the hope of offloading one of those uncompetitive plants onto electric consumers in the Mountain State.
MonPower, one of two FirstEnergy subsidiaries in West Virginia, announced late last week that it was requesting proposals for 1,300 megawatts of new power that would go to customers in the northern half of West Virginia.
It happens that the parent company’s faltering competitive generation business has a 1,300 megawatt coal-fired plant on the banks of the Ohio River that is waiting to be sold, or “preserved,” as FirstEnergy CEO Charles Jones described it.
FirstEnergy’s attempt to sell the Pleasants plant near St. Marys has been expected by consumer advocates and proponents of renewable energy in West Virginia for nearly a year now.
FirstEnergy officials dropped the first hint in a 10-year planning document last January, when they suggested MonPower could seek to buy another coal-fired power plant in the near future. Jones later admitted in April that they were looking for MonPower to buy the 37-year-old Pleasants plant.
Last month, Jones made it even more clear, telling investors that they would “work diligently with legislators and regulators” to get the Pleasants sale approved by the West Virginia Public Service Commission, the state agency charged with regulating utility companies.
As part of MonPower’s request for proposals, the company is supposed to accept offers from numerous energy companies that could sell other power sources, like wind turbines, solar arrays and natural gas plants that have been out-pricing coal boilers in the regional energy market. The point is to get the best price for MonPower and Potomac Edison electric customers in Morgantown, Clarksburg, Martinsburg and the surrounding region.
But skeptics and opponents of the Pleasants sale are arguing the proposal that MonPower put forward last week is tailor-made for their coal-fired power plant and is meant to limit other bids.
“It certainly seems to be geared to bless the plant that the company wants to offer,” said James Van Nostrand, a West Virginia University law professor and the Director of the Center for Energy and Sustainable Development. “Does this really test the market? Does this really capture what’s out there?”
The 1,300 megawatts that are requested clearly matches the exact amount of electricity the Pleasants plant can put out.
But the proposal also dictates the geographic region that any competing power plants can be located in, limiting it to wind farms and generating stations in part of West Virginia and a portion of Pennsylvania.
There are several gas-fired power plants that are currently being planned or built in the northern half of the state by Energy Solutions Consortium, but it is unclear whether they would even qualify under MonPower’s proposal.
Van Nostrand, who worked as an energy regulatory attorney previously, said he has never seen such a short timeline for a proposed purchase of this size.
MonPower issued the proposal last Friday. They expect initial applications by the end of this week, and the final proposals, which will likely require millions of dollars in assets to be transferred, are due by the beginning of February.
“This is a financial bailout for FirstEnergy. Everybody knows the financial stress they are in,” Van Nostrand said.
Earlier this year, other groups, including the state’s Consumer Advocate Division, pleaded with the state’s PSC to require MonPower to request proposals in advance so that the company could have time to compare what other power sources might be up for sale, but FirstEnergy’s attorneys fought that request.
The three-member commission didn’t require the company to issue the proposal, the same way it didn’t open up a review of the company’s 10-year energy plan in January, after groups questioned whether a coal-fired power plant could actually be the cheapest energy source for customers.
The opposition to MonPower’s takeover of the Pleasants plant is largely due to a similar action by FirstEnergy in 2013, when the utility’s attorneys successfully convinced the PSC to approve MonPower’s $1.1 billion purchase of the Harrison Plant, north of Clarksburg.
Outside groups, and one of the commissioners at the time, advocated against the Harrison deal, arguing it would cost West Virginians too much money and would allow the utility to double down on coal at a time when other companies were diversifying into renewable energy sources. Customers are still paying for that purchase.
Earlier this year, a study by the Institute for Energy Economics and Financial Analysis estimated that the 2013 deal has cost West Virginia consumers more than $164 million they otherwise wouldn’t have paid if the purchase hadn’t been approved.
That study was authored by Cathy Kunkel, who was a witness for the West Virginia Citizen Action Group during the 2013 regulatory case.
“It’s the same corporate strategy,” Kunkel said Wednesday. “Nothing has fundamentally changed since Harrison. The plants are struggling to compete and they would rather have rate payers cover it.”
Reach Andrew Brown at email@example.com, 304-348-4814 or follow @andy_ed_brown on Twitter.