FirstEnergy Corporation's foray into competitive markets has not done well and the company Monday proposed having consumers pay for a safety net under two of its large Ohio power plants in a proposal that cleverly circumvents the fact that the plants are deregulated -- no longer the responsibility of rate payers -- as the company demanded six years ago.
View full sizeFirstEnergy has refused to make public the complete details of its energy efficiency programs, prompting two environmental groups, which have seen the details but cannot legally reveal them, to petition the PUCO to order FirstEnergy to unseal documents it filed with the agency about the programs. FirstEnergy argues that the documents contain competitive information.AKRON, Ohio -- FirstEnergy Corp. has filed a new rate plan with the state -- asking for what amounts to regulated pricing for the power generated by some of its unregulated Ohio power plants.
Consumers would pay more in the deal that seems designed just as much to insulate the company's non-regulated division as to save consumers money.
FirstEnergy admits the new plan would raise monthly consumer electric bills during the next three years, but argues that over 15 years, the proposed special arrangement would save -- or even make money -- for consumers.
The idea is that the Illuminating Co., Ohio Edison and Toledo Edison, would sign an agreement to buy -- at whatever the actual cost -- all of the power that the Davis-Besse nuclear power plant and the very large coal-fired W.H. Sammis power plant generate during the next 15 years.
The company in 2012 briefly closed Sammis because it could not compete with companies offering cheaper power from gas-fired power plants. And Sammis may require more emission controls to meet ever-tightening federal regulations.
In this proposal, the Illuminating Co., Ohio Edison and Toledo Edison would also buy FirstEnergy's small share of power generated by the Ohio Valley Electric Corp, which owns another coal-fired facility in southern Ohio.
The Illuminating Co., Ohio Edison and Toledo Edison -- which no longer own power plants and are distribution-only companies -- would not use the power they bought but would immediately sell the electricity into regional wholesale power markets -- where low prices have hurt companies such as the unregulated FirstEnergy Solutions, the owner of FirstEnergy's power plants, including Sammis and Davis-Besse.
The three distribution companies would probably lose money over the first four years, money that ratepayers would make up by paying an extra charge on their bills.
The new charge -- which every customer would have to pay, even those buying electricity from competitors -- would add about $3.50 per month in the first 12 months to the bills of consumers using an average of 750 kilowatt-hours per month, said the company.
That would decrease in the second, third and fourth years, before becoming a monthly credit on later bills, said William Ridmann, FirstEnergy's vice president of rates and regulatory affairs.
"The value that we calculate for all 15 years, for all customers, is about $2 billion," he said.
The plan will probably ignite a firestorm of protest at the Public Utilities Commission. FirstEnergy's initial proposal, filed after the close of business Monday, involved about 1,000 pages of explanation and defense. Typically, that is only the beginning in a rate case.
The Ohio Consumers' Counsel immediately questioned the move.
"About 1.9 million consumers paid billions of dollars to FirstEnergy for its transition to deregulated power plants, under a 1999 Ohio law," said spokesman Scott Gerfen.
"Fifteen years later, FirstEnergy is again asking consumers to pay charges related to the power plants. Needless to say, we are concerned for consumers. We will be analyzing this new request and will make recommendations to the PUCO."
This article was edited on Tuesday, Aug. 5, to correct the number of years the company estimates customer bills would increase under the new plan. Monthly bills would be higher for the first three years.