FirstEnergy is trying to wrap up a15-month rate case by negotiating a closed-door deal with state regulators and then persuading opponents to sign on. The company says it might have to close Davis-Besse and its Ohio River Sammis coal-fired plant without a deal to have customers subsidize the two power plants by paying more.
FirstEnergy Corp. wants its Illuminating Co., Ohio Edison and Toledo Edison customers to pay extra for up to eight years to subsidize its no-longer-competitive coal-fired Sammis power plant on the Ohio River. COLUMBUS, Ohio -- FirstEnergy has been doing some serious early Black Friday shopping, squeezing a deal out of state regulators to have customers pay hundreds of millions of dollars extra over the next eight years to subsidize two of its Ohio power plants that cannot compete with natural gas-fired plants.
Company lawyers have been meeting privately with the staff of the Public Utilities Commission of Ohio at least since October at the conclusion of a six-week public hearing on the proposal conducted by a PUCO administrative judge.
That litigation produced tons of trial transcripts, most of which became irrelevant when the private talks began, say opponents.
Then at the end of last week, the PUCO staff contacted FirstEnergy's opponents, inviting them to get involved and take a look at the proposed "settlement" it had worked out independently with the company.
But, any one who attends the talks has been told to sign a non-disclosure agreement.
Jason Rafeld, chief of staff, made it clear that the staff wants to file the settlement in the case docket before Thanksgiving, meaning by the close of business Wednesday.
Rafeld may have to wait for Cyber Monday, however, said one source, given the slow progress at getting any of the opponents to sign on.
None of them would talk for the record, but some questioned whether the private talks subverted "good public policy," several called the proposed compromise "outrageous," "garbage" and "worse than when it was first proposed."
Todd Schneider, spokesman for the company, could not comment about the details but confirmed the company has been in "discussions with key parties in Ohio to reach a positive outcome in this case.
"We're confident we will reach a settlement that will serve the best interests of Ohio electric customers and retain key power plants that employ thousands of Ohioans," he said.
Allowing for another round of formal comment against the deal, followed by company counter argument, a staff filing Wednesday or Monday could put the case before the five-member voting commission in about 60 days. FE's current rate plan expires May 31, 2016.
That's about the time that FirstEnergy CEO Chuck Jones predicted when he talked publicly to analysts in October and again about two weeks ago, saying "we expect a settlement by early 2016."
But at this point the settlement might end up as a proposal signed by only two parties, the staff and the company.
Persuading the lawyers representing industrial, commercial and environmental groups opposing the plan to sign the settlement appears to have become a challenge, say people knowledgeable about this week's closed-door meetings.
They believe that what's happening now is a "political settlement" rather than a regulatory compromise to the case that began 15 months ago.
Here are the mechanics of how the company would have customers subsidize the W.H. Sammis and Davis-Besse power plants.
FirstEnergy Solutions, owner of the two power plants, would sign a long-term "power purchase agreement" with FirstEnergy's regulated Ohio utilities -- The Illuminating Co., Ohio Edison and Toledo Edison.
These are the companies that built the power plants, which FirstEnergy transferred to its unregulated FES at the end of 2005.
The three delivery companies would agree to buy all of the power that Davis-Besse and Sammis generate at whatever it costs, including a profit, and immediately sell the power into the competitive wholesale market supplying the regional high-voltage grid.
If they sell the power for less than they paid FES for it, customers would make up the difference. If they are able to sell it for more than they paid, customers would get a rebate.
Opponents, including the Ohio Consumers' Counsel and the Northeast Ohio Public Energy Council, or NOPEC, earlier argued that the arrangement would cost consumers an extra $3 billion over the originally proposed 15-year term.
FirstEnergy originally said the power contracts would actually save consumers $2 billion over the 15 years because the price of natural gas would rise after the first three years.
Gas analysts are not so sure about that prediction, and the new shorter length of the proposed contracts makes it even tougher to figure out customer savings or burdens.