It’s not usually a good idea to dis federal regulators. FirstEnergy doesn’t seem to care.
Almost two months ago, the Federal Energy Regulatory Commission (FERC) ruled against the Ohio-based utility giant’s request to bail out its uneconomic power plants. FirstEnergy then tweaked its proposal to obtain the same result but, according to its CEO, “without the need for…FERC approval.”
To “FERC-proof” its bailout scheme, FirstEnergy now tries to mockingly call its subsidy a “surcharge” rather than a “power purchase agreement (PPA).” Put another way, by simply changing the wording of the original bailout, the utility’s sleight of hand aims to skirt federal oversight.
Environmental Defense Fund (EDF) is joining the Electric Power Supply Association (EPSA) and others in asking FERC to overturn this end-run attempt – something we’re calling FirstEnergy’s “Virtual PPA.” It’s virtually the same as the original rotten deal, and it’s just as bad for customers, clean air, and markets. Read More
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At least in theory, government officials are supposed to monitor electric utilities and ensure they do not abuse their monopoly power. For more than a century, these independent regulators have protected customers from unfair, above-market prices and provided a check on giant corporations.
That social contract is being tested in Ohio.
In an unprecedented move, the Public Utilities Commission of Ohio (PUCO) today allowed FirstEnergy to seek a new power plant bailout – a full day before opponents were to offer their objections. So, without listening to the arguments against the deal, the PUCO rubberstamped the utility’s request for a rehearing.
Unfortunately, this is not the PUCO’s first rubber-stamping. FirstEnergy’s original proposal would have forced customers to pay $4 billion to subsidize the utility’s old and dirty power plants, which could no longer compete in the market. That proposal was almost laughable since the power plants were not needed, and certainly not at such a high price – other companies proposed to offer the same amount of electricity at significantly lower prices. Read More
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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. Read More
The Federal Energy Regulatory Commission (FERC) recently rejected Ohio-based utilities FirstEnergy and AEP’s bailout deals, which the Public Utilities Commission of Ohio (PUCO) recently approved. FERC, which is responsible for ensuring fair wholesale electricity prices, recognized that these backroom bailouts were “abusive,” taking advantage of “captive” customers and harming the competitive market. Fortunately, FERC’s rulings protect customers and markets – which the PUCO utterly failed to do in approving these deals.
FirstEnergy and AEP wanted these bailouts to protect their old coal and nuclear plants, which are losing money because they cost more to operate than the money received from power sales. The companies considered shutting down the plants, but they concocted the backroom bailout deals in a last-ditch attempt to keep them open and money rolling in. Read More
America got a rare unanimous decision from the Supreme Court this week in a case that has widespread implications for our electric grid, as well as the markets and regulations that govern and move it.
The case was Hughes v. Talen Energy Marketing (docket no. 14-614). The Court decided it 8-to-0, with Justice Ginsburg writing the opinion.
It centered on a Maryland decision to guarantee fixed revenues for an electric generator. Typically, generators are paid through wholesale markets, regulated by the Federal Energy Regulatory Commission (FERC). These wholesale markets keep prices down and costs competitive by only paying for the lowest-cost resources necessary to keep the system running. By guaranteeing money for a generator, no matter how competitive it was in the market, Maryland effectively muted the price signal and ensured that electricity from this particular resource would be paid – regardless of how costly it might be for consumers. Read More
Wait – Ohio utility regulators did what?
The $6-billion bailout of uneconomical coal and nuclear plants is bad enough. But the decision by the Public Utilities Commission of Ohio to let two power companies saddle ratepayers with their bad debt also sets a dangerous precedent that could have ramifications for consumers in other states.
This is more than a local rate case. It’s about traditional utilities going on the offense against new and cleaner power providers that offer cheaper rates in a competitive energy market – a drama playing out nationwide.
All eyes are now on the federal agency overseeing wholesale electricity markets to see if the Ohio deal will stand or fall. Read More
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