The state Public Service Commission’s final decision on the proposed deal for FirstEnergy subsidiaries to acquire a coal-fired power plant may not be a simple yes or no answer.
During evidentiary hearings Tuesday, PSC Chairman Michael Albert said Mon Power and Potomac Edison’s request to purchase the Pleasants Power Station, in Pleasants County, from FirstEnergy suggested the commission will explore options outside of an outright approval or rejection of the deal.
Specifically, Albert discussed a scenario in which the PSC, which regulates public utilities, would grant conditional approval and the transfer would be allowed to commence in 18 to 24 months if the companies’ projections on power capacity needs, a reason they say they want to purchase the plant, are proven to be accurate.
“We would leave things as they are now for Mon Power and [Allegheny Energy Supply], and we cannot approve until someone says, ‘this is dead on the money’ or ‘this is so far off, we can’t tell you what we think is going to happen is likely to happen,’” Albert said.
Albert said Pleasants would have to be operated “in its ordinary course,” with the companies certifying that no material changes were made in the operations. When the established time frame has passed, the companies would have to certify to the PSC that the projections they backed have come to fruition, he said.
Groups opposing the transfer argue the $195 million deal would raise customer utility bills and that FirstEnergy is offloading the plant to its subsidiaries so it can become a part of West Virginia’s regulated market, where it is guaranteed a profit.
Prepared testimony filed by energy and environmental consultant David Schlissel on behalf of opposition groups said the deal would likely cost customers $470 million over the next 15 years.
Opposition groups have also questioned the companies’ need for the plant’s power. Bradley Eberts, manager of load forecasting for FirstEnergy Service Company, said in testimony that projections prepared by the company show Mon Power and Potomac Edison’s current generating capacity will exceed its energy needs for all but 27 hours through 2021, but does not account for reserve margin.
FirstEnergy and the companies say the deal will lead to lower rates for customers, including a $1 monthly decrease for residential customers, adding that the plant supports area jobs.
“We believe the proposed Pleasants transaction offers economic benefits, as well as rate reductions for more than 500,000 Mon Power and Potomac Edison West Virginia customers,” FirstEnergy spokesman Todd Meyers said.
Jody Murphy, director of the Pleasants Area Chamber of Commerce, said in a letter of support for the deal that the transfer is necessary to prevent the plant from closing.
But Emily Medine, a member of the National Coal Council, a federal advisory committee to U.S. Secretary of Energy Rick Perry, said in testimony last week that it’s “unreasonable to assume” that coal-fired power plants will have long lifespans as energy market continues to change. She added that the tougher market for coal doesn’t mean transferring plants to regulated markets is the cure-all.
“As I mentioned, I just joined the National Coal Council, so I’m very supportive of continuing coal generation, and I think it’s low cost,” Medine said. “That doesn’t mean a regulated utility needs to be the owner of that plant.”
During hearings Tuesday, Schlissel said the idea Alberts floated would be a way to cut through the uncertainty regarding the multiple competing projections among parties in the case.
Randall Short, deputy director of the PSC utilities division, said in the hearings that conditional approval may provide more clarity on the accuracy of FirstEnergy’s projections, although added that the 18 to 24-month time frame may not be enough time.
Karan Ireland, a member of West Virginians for Energy Freedom and solar advocacy group West Virginia SUN, said the best decision for the PSC remains to reject the deal outright.
“They don’t need that plant,” Ireland said of the companies. “The evidence that has been born out of the testimony shows it’s going to hurt customers, especially people living on fixed incomes. We don’t want to see that happen.”
FirstEnergy declined to comment on any developments in the evidentiary hearings.
Albert said the case will pose a difficult decision for the PSC, calling it “a hotly contested matter” with various competing considerations.