You have to give some credit to FirstEnergy. It does hire creative lawyers.
After the Federal Energy Regulatory Commission (FERC) effectively killed the utility giant’s $4-billion bailout request to keep its uneconomic power plants online, those expensive attorneys figured they could redefine a few words and restore the subsidies. In an attempt to thwart FERC’s decision, the utility is asking the Public Utilities Commission of Ohio (PUCO) to consider “modifications” to its bailout plan. However, these changes will still result in increased customer bills at the rate of $4 billion.
For almost two years, FirstEnergy argued it needed to prop up its uneconomic generators with “power purchase agreements” (PPA) between the utility and its affiliate companies. After federal regulators declared such transactions were illegal because they distorted competitive markets, FirstEnergy lawyers are now saying, “Just kidding!” Instead of using the term “PPAs,” the utility now prefers “surcharges,” skirting FERC’s ruling and hoping it won’t notice there’s been no real change.
The utility also hires creative accountants. FirstEnergy’s original proposal would have the PPAs reflect the actual costs of producing electricity from these old power plants. Now those accountants are saying, “Just kidding!” So instead of actual costs (which require FERC review), the “surcharges” would be based on estimated power production costs – guesses the utility made 18 months ago that have already proven to be way off base.
These number crunchers also no longer care about actual contracts, so long as they secure the higher rates. Without the official agreements in place, it now seems a handshake among the utility’s affiliates will do, meaning state regulators don’t have to regulate those “deals.”
FirstEnergy wants more money and wants it now. The utility is asking the PUCO to embrace this totally new (but basically the same) approach within the next couple of weeks – so the power firm can start charging higher rates by the first of June. In its rush for profits, the utility wants to avoid hearings, filings, and investigations – those pesky things that regulators usually do.
You have to give FirstEnergy credit for chutzpah. With a straight face, its lawyers and accountants still say the $4-billion bailout will “protect customers,” the very people who will be stuck with higher electricity bills. Of course, the real beneficiary of these legal and accounting sleights of hand is the utility, who’s hoping to recover from a stock downgrade after the FERC ruling.
FERC stepped in to protect Ohioans in this case, but now FirstEnergy is trying to flex its political muscle in the state again.
As we’ve noted before, FirstEnergy also hires powerful lobbyists, many of whom are the friends and former staffers of key politicians. The power company contributes generously to lawmakers and their favorite causes, which seems to usually ensure it gets what it wants in Ohio. FERC stepped in to protect Ohioans in this case, but now FirstEnergy is trying to flex its political muscle in the state again.
If the lawyers and accountants were being honest with their wording, rather than creative, they’d describe the “new” FirstEnergy bailout for what it is and always has been – “corporate cronyism.” Here’s hoping Ohio regulators – all of whom are self-described conservatives who embrace markets over subsidies – will mock FirstEnergy’s new proposal. Call it creative, but still flawed – and still essentially a bailout.
Photo credit: © Oleg Prikhodko / istockphoto.com