Over the past few months, I have written a good deal about FirstEnergy, the massive electric utility serving customers across six states, and specifically its attempts to saddle Ohioans with the cost of its risky investments. The company has asked the Public Utility Commission of Ohio (PUCO) to guarantee profits for its uneconomic power plants through customer-funded subsidies.
FirstEnergy has also prevented opponents of its bailout from examining all relevant information to the case, including the credibility of its key witnesses. But, last week, the PUCO rejected these attempts to hide information about FirstEnergy’s embattled $3 billion proposal. As we near the start of the proposed bailout hearings on August 31st, this decision is a victory for transparency – and places the utility’s proposal on shakier ground than ever.
The full story involves a consultant – Judah Rose of ICF International – who FirstEnergy hired to justify the bailout. Rose was asked to project future electricity market prices, which would determine the economic value of the power generation plants in question. This contributed to how FirstEnergy settled on the figures for its bailout request.
Some opponents of the proposal – particularly IGS Energy, a competitor that would be impacted by subsidies to FirstEnergy – argued Rose had a history of rosy projections that supported his utility clients’ arguments. Last December, IGS sought to obtain testimony from an earlier, unrelated case in which Rose appeared before the PUCO.
FirstEnergy lawyers tried for months to squash the request. They argued that although the previous testimony had been presented to the PUCO, it was proprietary and should be kept confidential. They claimed the PUCO was not following procedures. They even asserted the utility was contractually prohibited from sharing such data.
A hearing examiner at the PUCO would have none of it. That regulator in June declared IGS Energy was, in fact, entitled to get testimony from another case that might impeach the credibility of one of FirstEnergy’s star witnesses.
The utility, as you might guess, appealed, arguing for strict secrecy and asking the full commission to overturn the hearing examiner’s decision.
IGS tried to be the voice of reason:
[T]he economics of this multi-billion dollar decision turn largely on Mr. Rose’s projections…Before the Commission agrees to commit FirstEnergy customers to [the proposed bailout] (based on Judah Rose’s forecasts), it is reasonable to test his forecast by comparing it with other forecasts Mr. Rose has produced."
An IGS lawyer went further: “IGS believes in free markets where competition, transparency, and responsiveness to consumer preferences drive innovation and efficiency.”
IGS was not alone in its calls for openness. The Office of the Ohio Consumers’ Counsel and the Northeast Ohio Public Energy Council also tried to obtain information from FirstEnergy. They argued such information was needed if their own in-house experts were to review and advise on the bailout request, saying in their joint brief, “This (proposed) limited access is a new policy that severely handicaps parties’ ability to challenge any charges.”
The full PUCO agreed last week, declaring IGS is “entitled to discover information related to the credibility of Mr. Rose, including the ability of Mr. Rose to reliably forecast future market prices.”
In its brief, the PUCO stated “We have been, and continue to be, skeptical of the use of claims of confidentiality to preclude cross-examination of witnesses.”
Agreed. Maybe FirstEnergy is afraid a little sunlight will debunk its projections. Maybe the utility fears that the more we know about its bailout proposal, the less we’ll like it. Fortunately, the PUCO is pushing for the transparency such a large customer-funded bailout deserves.
Photo source: Wikimedia/Niabot
This is one in a series of posts that examine FirstEnergy’s proposed bailout for its aging coal fleet and other market manipulations. Stay up to date on FirstEnergy by visiting EDF’s website, where we’ve published helpful resources and will host a series of newsletters. If you would like to receive our FirstEnergy newsletter directly, please click here.