FirstEnergy has given up its quest to transfer a Pleasants County power plant to its subsidiaries, after a federal agency blocked the controversial deal and a state agency approved it subject to several conditions.
Counsel for FirstEnergy said subsidiaries Mon Power and Potomac Edison will not file a request for rehearing with the Federal Energy Regulatory Commission regarding the transfer of the coal-fired Pleasants Power Station, according to a filing with the state Public Service Commission.
That means FERC’s action to reject the $195 million deal for failing to meet federal standards will stand. FirstEnergy needed approval from both FERC and the PSC in order to close the transaction.
The proposed deal would have placed the plant in a part of a regulated market, where it is guaranteed a profit. It faced strong opposition from consumer advocacy groups throughout the life of the regulatory proceedings, which lasted for more than a year.
FirstEnergy counsel also said it won’t accept the PSC’s approval, which included various conditions intended to protect ratepayers, such as compensation if plant sales exceed costs and not being held responsible for closing costs if it closes within eight years of the transfer.
The filing said the PSC’s conditions “would result in Mon Power assuming exposure and significant commodity risk, which is inconsistent with FirstEnergy’s announced corporate strategy.”
Advocacy groups said the companies didn’t need the plant and that FirstEnergy only attempted the transfer to bail out corporate shareholders while customers would be forced to pay for an unprofitable plant. An analysis filed on behalf of these groups said the deal would cost the average residential household roughly $69 per year over a 15-year period.
“We were heartened by FERC’s decision and are thrilled to see FirstEnergy bail on its attempt to get corporate welfare from hard-working West Virginians,” Karan Ireland of solar advocacy group West Virginia SUN said in a news release from West Virginians for Energy Freedom, a coalition formed to oppose the deal.
The companies have maintained that the purchase will prevent an energy shortfall for its customers and protect them from energy marketplace volatility. Businesses and economic development organizations who spoke in support of the deal often said a rejection would lead to the plant shutting down, costing the community jobs and tax revenue.
“FirstEnergy ... has stated repeatedly it will be leaving the competitive generation business sometime next year,” Jody Murphy, director of the Pleasants Area Chamber of Commerce, said in a letter of support to the PSC last year. “That said, Pleasants County’s plant stands a good chance of being deactivated without the sale to Mon Power.”
FirstEnergy CEO Charles Jones told investors in earnings calls in 2016 that the company wants to exit competitive energy markets and sell coal plants to regulated markets or shut them down entirely.
For now, it’s unclear what the future of the plant holds. FirstEnergy spokesman Todd Meyers said in an email that the company “will continue to evaluate other options.”
“We have not made any final decisions or announcements concerning the future of our competitive generation plants, including whether they will be sold or closed,” he said. “That’s all I know at this point in time.”
Coal-fired plants like Pleasants have struggled to survive as natural gas continues its rise. An analysis by S&P Global Market Intelligence found 46 coal units totaling 15,600 megawatts have regulatory approval to retire by 2028.
“The Pleasants Plant is better suited for the 19th century, not the 21st,” said Laura Yokochi of the West Virginia Sierra Club chapter, an intervening party in the case, in a statement. “We now have cutting edge technologies, such as solar, wind, and energy efficiency, which should play a part in stabilizing the region’s economy and creating new employment opportunities. FirstEnergy must develop a fair transition plan for its workers and embrace the rapidly growing clean energy economy.”