Independent power suppliers trying to compete for your business are making a federal case out of the proposals from FirstEnergy and AEP/ Ohio Power to force customers to pay for power from their old uncompetitive plants at whatever the cost -- even if the customers have contracts with other companies.
The W.H. Sammis power plant on the Ohio River is FirstEnergy's last Ohio coal-burning plant, and needs subsidies in the form of higher customer electric bills, says the company, to survive in current wholesale electric markets. Independent competitors are taking the issue to the Federal Energy Regulatory Commission because they fear Ohio regulators will approve a special deal to save Sammis. WASHINGTON, D.C -- Several independent national power companies and their trade associations have asked federal regulators to take a look at the special power deals FirstEnergy and American Electric Power now have pending before Ohio regulators.
The independents want the Federal Energy Regulatory Commission to step in and review the plans first conceived by FirstEnergy and then copied by AEP to have their Ohio distribution companies buy power at whatever it costs to generate from their least competitive power plants, which are now owned by unregulated affiliated companies.
The unprecedented deals would force customers -- even customers who now buy electricity from competitors -- to pay for that power, in effect subsidizing the old plants.
For example in the case of FirstEnergy, the plan is to have the Illuminating Co., Ohio Edison and Toledo Edison buy all of the power generated by Davis-Besse nuclear power plant and the coal-burning W.H. Sammis plant at whatever the cost.
Both plants are owned by the unregulated FirstEnergy Solutions and can sell their power anywhere, but says FirstEnergy, are facing stiff competition from gas-fired competitors dominating the wholesale markets.
But that's the whole point of deregulation, say the independent competitors. They argue that the proposed in-house deals will short-circuit competition in Ohio before spreading to other states.
The Electric Power Supply Association and the Retail Energy Supply Association are asking for an immediate FERC review of the special deals called "power purchase agreements" because they fear the Public Utilities Commission of Ohio will approve them without a detailed analysis of their impact on competition.
"The Affiliate PPA strikes at the heart of the Commission's longstanding restrictions on affiliate transactions," they wrote of the FirstEnergy deal in their FERC complaint.
Neither FirstEnergy nor AEP have been planning to submit the power purchase plans to federal authorities, say the competitors, because they are relying on an old FERC ruling that permitted such self-dealing in Ohio because the state allows customers to "shop" for power from other power suppliers.
But that loophole doesn't -- or shouldn't -- exist for these power purchase deals, say the independents, because both companies are proposing the extra cost of the power be passed on to all customers, even those customers who buy electricity from competitors.
The Ohio Consumers' Counsel, which has opposed both the FirstEnergy and AEP power purchase deals at the PUCO, filed its own objections with the FERC late Wednesday.
"The Ohio Consumers' Counsel fully supports the relief sought in the Complaint (of the competitors), in the interest of Ohio consumers," the OCC filing reads.
"The FirstEnergy PPA (power purchase agreement) would impose on captive Ohio retail consumers unduly discriminatory and preferential costs that should be borne by FirstEnergy Utilities marketing and generation affiliates," the OCC argued.
The Consumers' Counsel complaint also argued that if the FERC reviews the deals as the independents are asking it to do, the federal commission would find the cozy in-house agreements do not meet the competitive standards the commission established in previous cases.
And the Consumers' Counsel included a new estimate of the cost to consumers. FirstEnergy residential customers could pay as much as $1,100 extra over the next eight years, the complaint argued. Previous estimates were $800.
The total extra costs shouldered by all FirstEnergy customers would balloon to $5.15 billion, the OCC complaint argues, because it now doubts the old plants, even with subsidies, would win approval in special auctions conducted by PJM Interconnection, the independent non-profit company that manages the high-voltage grid in Ohio and 12 other states.
Similarly, the Consumers' Counsel revised estimates of the impact on AEP's Ohio Power's residential customers could be as high as $1,000 in extra bills over the eight-year life of the AEP power purchase agreement. Total extra costs to all Ohio Power customers could total $3.1 billion, the Consumers' Counsel complaint argues.
In a statement issued Wednesday evening, Ohio Consumers' Counsel Bruce Weston summed the situation and the need for the FERC intervention this way:
"Today we ask federal regulators who oversee the nation's electric markets to protect several million Ohio consumers from paying higher electric bills to bail out deregulated power plants."