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Billions at Stake as First Energy PUCO Hearing Begins

A PUCO hearing is underway in Columbus to investigate a FirstEnergy proposal that critics contend is a bailout of aging power plants. Credit: Nyttend/Wikipedia.
A PUCO hearing is underway in Columbus to investigate a FirstEnergy proposal that critics contend is a bailout of aging power plants. Credit: Nyttend/Wikipedia.
September 1, 2015

COLUMBUS, Ohio – FirstEnergy executives took the stand Monday in a long-awaited Public Utilities Commission of Ohio (PUCO) hearing, with billions of dollars at stake.

FirstEnergy wants their three Ohio utilities to purchase energy at above-market prices to shore up two aging power plants, owned by their subsidiary FirstEnergy Solutions. If approved, the utilities would have to pay the non-regulated subsidiary non-competitive rates for 15 years – meaning ratepayers would be responsible for paying the bill.

According to the utility, the plants "aren't making money in the open market," and the subsidies are needed to "preserve stable prices and reliable services."

Dave Rinebolt, executive director of Ohio Partners for Affordable Energy, says it's not the customer's job to guarantee a utility's profits.

"A bailout of these old power plants will not be good for customers," he says. "Customers are better served by the market establishing prices and by investing in energy efficiency."

The proposal would assist the aging W.H. Sammis and Kyger Creek coal-fired power plants, along the Ohio River near East Liverpool and Point Pleasant, respectively, and the Davis-Besse nuclear power plant near Toledo.

FirstEnergy claims the purchase agreements would save Ohioans $2 billion over the course of 15 years. The independent Ohio Consumers' Counsel, however, estimates the proposal will actually cost customers $3 billion.

The hearing is expected to continue for several weeks.

Now that new generation from natural gas and more renewable energy is becoming competitive, conservationists question FirstEnergy's turn-about rejection of the free market. FirstEnergy claims the unusual non-competitive purchase agreements are required to protect the company against unpredictable energy prices and prevent brownouts – or worse. Critics aren't buying it.

Rinebolt says a recent auction that sets the prices the plants are paid for power resulted in a 30 percent increase.

"That sort of begs the question 'Are these plants not profitable when the price that we'll pay for them just increased by 30 percent?' Most observers agree that the market is working," he says.

Earlier this year, PUCO denied a power purchase agreement from American Electric Power, but the company filed another now-pending plan to have customers subsidize five plants.

Mary Kuhlman, Public News Service - OH