FirstEnergy settlement delayed as PUCO agrees with opponents, sets new hearings

http://www.cleveland.com/business/index.ssf/2015/12/firstenergy_set...

FirstEnergy settlement delayed as PUCO agrees with opponents, sets new hearings

By John Funk, The Plain Dealer 

on December 09, 2015 at 2:15 PM, updated December 09, 2015 at 4:46 PM
COLUMBUS, Ohio -- There will be more formal hearings on FirstEnergy's proposed eight-year rate plan that would include customer-paid subsidies of two of the company's older power plants.

An administrative judge at the Public Utilities Commission of Ohio on Wednesday set a new round of hearings to begin Jan. 14.  An end date has not been set.

PUCO hearing examiner Megan Addison agreed with FirstEnergy's opponents that the company's latest proposed "settlement" in the case involves new issues that were not covered during a seven-week trial held earlier in the fall. FirstEnergy argued it had not raised any new issues requiring drawn out extra hearings.

Among the contested issues:

  • The company's announced goal to reduce carbon dioxide emissions from its power plant fleet by at least 90 percent by 2045, compared to 2005 levels. Opponents say that is just a goal, not a guarantee.
  • The company's commitment to bring back the customer energy efficiency programs it scrapped last year after lawmakers froze state energy efficiency mandates for two years. Opponents argue that without state verification and enforcement, the company's pledge means little.

But the biggest sticking point in the rate plan is the company's proposal to have the Illuminating Co., Ohio Edison and Toledo Edison buy all of the power that the Davis-Besse nuclear plant near Toledo and the W.H. Sammis coal-fired Ohio River plant generate -- at whatever it cost to make, plus a profit for FirstEnergy Solutions, the unregulated subsidiary that now owns the plants.

Originally, the company proposed the three local distribution utilities buy the power from the old plants for the next 15 years. The plan now is for an eight-year power purchase deal.

The company has explained that the two plants currently cannot compete with the cheap power available on wholesale markets, much of it generated by new natural gas-fired power plants but eventually gas-fired power will become more expensive.  About half dozen new gas-fired plants have been permitted in Ohio and will add to that cheap power.

FirstEnergy argues that the price of natural gas will eventually rise, making Sammis and Davis-Besse competitive. 

In the meantime, the company argues that the purchase agreements will cost customers a little over $400 million extra in the first three years but save them about $560 million over the eight-year plan because as natural gas prices rise, the power from Davis-Besse and Sammis will be relatively cheaper and customers will get a credit on their bills.

Opponents, including independent power companies, businesses, consumer and environmental groups, have argued that gas prices will remain low into the foreseeable future and that the roughly $3 billion FirstEnergy has spent refurbishing Davis-Besse and adding pollution controls to Sammis in recent years means the power they produce will remain expensive for years to come.

The Ohio Consumers' Counsel and the Northeast Ohio Public Energy Council, or NOPEC, contend the power purchase deal will cost customers and extra $3.9 billion over the next eight years.  

FirstEnergy has been counting on the five voting members of the commission to approve the rate plan by Feb. 10 in order to give the company time to conduct wholesale power auctions to buy power. There is no statutory deadline for the commission to act. 

But FirstEnergy's contracts with power suppliers now providing electricity to the Illuminating Co., Ohio Edison and Toledo Edison expire on May 31, 2016, and the company has been planning to hold several auctions.

Doug Colafella, FirstEnergy spokesman, said the company still hopes for a  decision early next year.

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0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on December 18, 2015 at 6:40am

Thank goodness for being on AEP power for now.

Look out solar and wind energy, here I come.

Like any Do It Yourself project, putting in Solar Electric Panels and Wind Generators makes the cost of ownership much cheaper than overpaying a contractor for the same number of KWs installed.

Of course you get a Government Discount if you are overcharged by a Certified installer. This is sort of like having a New Vehicle Rebate that the dealership took by raising the sticker price.

I'm betting if we all installed our own solar, wind and geothermal the payback time would be 20% of the time it currently takes to get over the initial gouge by the Pros.

Mike MurphyPermalink Reply by Mike Murphy on December 18, 2015 at 12:21pm

what does these have to do with the MARCELLUS or UTICA??????????

Permalink Reply by Philip Brutz on January 8, 2016 at 2:26am

Past and future electric rate plans up before PUCO, Ohio high court

BY JIM PROVANCE BLADE 
COLUMBUS BUREAU CHIEF

COLUMBUS — Just as state regulators are about to set electricity rates in much of northern Ohio for the next eight years, the Ohio Supreme Court on Wednesday delved into whether they followed their own rules for the rate plan that’s about to expire.

During arguments before the high court about the past, both justices and attorneys were looking to the future.

The Public Utilities Commission of Ohio will resume hearings next week into a proposed rate plan from Toledo Edison’s Akron parent, FirstEnergy Corp., that would lock in a market for its subsidiary’s aging coal-fired and nuclear power plants regardless if the electricity they generate would be the cheapest option.

RELATED ARTICLE: FirstEnergy seeks ruling from PUCO on higher rate

Both sides agreed, however, that refunds for customers are not an option under the current plan, even if the high court should rule against the PUCO and the utility.

“What we’re looking for is a ruling that this can’t happen again in the future,” said Madeline Fleisher, attorney for the Environmental Law and Policy Center. “This issue will come up again if you don’t deal with it.”

The center and the Northeast Ohio Public Energy Council, a consumer aggregator serving the Cleveland area, argued that the commission failed to spell out why each of the conditions in FirstEnergy’s current Electric Security Plan was better for consumers than if the utility had to buy electricity on the open market.

That’s also a key issue in the case before the PUCO, as consumer advocates, environmental organizations, and competing electricity suppliers argue that the Davis-Besse nuclear plant near Oak Harbor and the W.H. Sammons coal-fired plant near Steubenville cannot compete economically with cheaper sources such as natural gas.

They claim the plan would cost consumers billions while FirstEnergy maintains it would save money over time.

PUCO attorney Tom W. McNamee argued that the rate plan now in place was essentially an extension of the plan that expired in 2012. The follow-up phased in higher generation costs that FirstEnergy claimed were caused by new federal clean air regulations that led to the closing of some coal-fired plants. The extension was to ease the cost increase on consumers, he said.

“It’s a great benefit to the public, frankly, to be able to do that,” Mr. McNamee said. That cost has since fallen.

The high court did not immediate rule, and it’s unclear whether a decision would come in time to affect the PUCO’s deliberations on the latest proposal affecting rates for the next eight years. The current plan expires May 31.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.


Read more at http://www.toledoblade.com/State/2016/01/07/Past-and-future-electri...

Permalink Reply by Philip Brutz on January 19, 2016 at 11:38am

Dynegy
Dynegy Offers Superior Alternatives to the FirstEnergy and AEP PPA Subsidies

January 13, 2016

In response to the exorbitant and counter-productive subsidies currently under consideration for FirstEnergy and American Electric Power (AEP), Dynegy (NYSE:DYN) announces two counter-proposals that it believes will save Ohio consumers billions of dollars over the next eight years, promote and protect Ohio jobs, aid in Ohio's compliance with the Clean Power Plan, and encourage consumer and business growth.

Dynegy's first proposal saves Ohio consumers and businesses $5 billion by providing the same amount of power promised under the FirstEnergy and AEP power purchase agreements (PPAs) at lower prices, $2.5 billion each in the FirstEnergy and AEP territories, over the 8-year term of the proposed PPAs. The power provided by Dynegy will be generated by Ohioans, at Ohio plants, for Ohioans. Dynegy owns approximately 5,400 MW at 10 different sites in Ohio, more than FirstEnergy's 5,300 MW, employs hundreds of Ohio workers, and is the third largest retail electric provider in the state. Furthermore, Dynegy's power plants use the region's vast fuel supplies, including its abundant and clean natural gas, providing further benefits to the state.

Alternatively, if the Public Utilities Commission of Ohio (PUCO) agrees on paying the out of market rates as requested by FirstEnergy and AEP, Dynegy believes that Ohioans should get something for their money. At the proposed rates, Dynegy could replace the plants being subsidized under the FirstEnergy and AEP PPAs by building 6,300 MW of new, clean natural gas powered generation in Ohio, bringing new jobs to the state, increasing economic activity and development, and providing reliability and resource adequacy for decades. This new generation could power four million Ohio homes and would use natural gas from Ohio's plentiful supply to meet the state's electricity needs. Further, this investment would help Ohio meet its obligations under the Clean Power Plan and improve reliability rather than relying on assets staying around longer than their useful life.

"If the PUCO and other elected officials in the state are interested in protecting consumers' and business' long-term interests while ensuring long-term reliability and price stability, then in lieu of accepting FirstEnergy's and AEP's proposals for long term power purchase agreements, the PUCO should adopt one of the alternate, superior proposals Dynegy is putting forth," said Robert C. Flexon, President and CEO, Dynegy Inc. "The PUCO could also institute a request for proposal process containing the same arrangements in the AEP and FirstEnergy PPA proposals. Exelon's recent proposal is also thoughtful, and Dynegy agrees with Exelon that this process should be competitive."

"We believe the counter-proposals are uniformly better for Ohio consumers and businesses than the AEP and FirstEnergy PPAs, keeping and creating jobs in the state that stimulate economic growth and development rather than weakening Ohio's competitive position. We ask for serious consideration from the PUCO and Ohio elected and state officials for our proposals," added Flexon.

About Dynegy

We are committed to leadership in the electricity sector. With nearly 26,000 megawatts of power generation capacity and two retail electricity companies, Dynegy is capable of supplying 21 million homes with safe, reliable and economic energy. Homefield Energy and Dynegy Energy Services are retail electricity providers serving businesses and residents in Illinois, Ohio and Pennsylvania.http://www.electricenergyonline.com/detail_news.php?ID=559585&a...

Permalink Reply by Philip Brutz on January 20, 2016 at 8:16am

Should the state approve FirstEnergy’s rate plan?

YES: The plan supports jobs, communities in this region

FirstEnergy’s proposal would help preserve a set of diverse power plants in Ohio, including Davis-Besse

BY BRIAN D. BOLES
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The proposed FirstEnergy Corp. rate plan for Toledo Edison customers is making statewide headlines. But the theme that’s been missing from the debate is what is at stake for northwest Ohio’s economy.

On a typical workday, more than 700 highly trained professionals at the Davis-Besse nuclear power station in Oak Harbor work to deliver safe, clean, and reliable energy to northwest Ohio. Thousands more support the plant’s operations, particularly during scheduled refueling projects that pump millions of dollars into the local economy.

Ohio is a step closer to ensuring that this plant can continue to power our region and our economy. FirstEnergy has reached a settlement agreement on its new rate plan that, if the Public Utilities Commission of Ohio approves it, will keep Davis-Besse operating for years to come. 

Davis-Besse has also received a license renewal from the U.S. Nuclear Regulatory Commission to operate through 2037. But unless PUCO approves the settlement, economic challenges could still jeopardize the plant’s future.

Historically low natural-gas prices, a sluggish economy, and market dynamics are putting significant pressure on Davis-Besse. Many nuclear plants across the country are in the same boat: Several key plants were forced into early retirement over the past two years, and several others have announced similar plans in the near future. 

 The recent closure of these nuclear units, along with a substantial percentage of the industry’s coal-fired fleet, has left our region with fewer options for generating electricity. Opponents of our plan say there is nothing to worry about, but our industry has been burned before by a lack of supply diversity — and that means higher prices for customers.

image: http://www.toledoblade.com/image/2013/07/01/300x_b1_cCM_z/CTY-davis...

Davis-Besse has received a license renewal from the U.S. Nuclear Regulatory Commission to operate through 2037. But unless the Public Utilities Commission of Ohio approves FirstEnergy’s rate plan, the company says, economic challenges could jeopardize the plant’s future.Davis-Besse has received a license renewal from the U.S. Nuclear Regulatory Commission to operate through 2037. But unless the Public Utilities Commission of Ohio approves FirstEnergy’s rate plan, the company says, economic challenges could jeopardize the plant’s future.
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FirstEnergy’s rate plan would help preserve a diverse set of power plants in Ohio, including Davis-Besse — an approach we believe is essential to electric price stability. FirstEnergy’s Electric Security Plan would allow our customers in northwest Ohio to share in the plants’ profits, as electric prices rise as projected over time. 

This unique approach is expected to generate about $560 million in savings for our customers over the plan’s eight-year term. These customer credits would help counterbalance rising energy prices that will inevitably occur when today’s rock-bottom electric prices rebound.

Preserving the economic benefits of Davis-Besse alone should give regulators much to consider. Davis-Besse is the largest taxpayer and employer in Ottawa County. The plant employs more than 700 people and has an annual payroll of nearly $65 million. 

Annual property and payroll tax payments of more than $6.3 million support local schools, police and fire departments, and other vital public services. Employees and the company have contributed more than $1.3 million to local charitable organizations, including United Way, Harvest for Hunger, and northwest Ohio food pantries, over the past five years. 

This economic impact is magnified during periodic refueling outages — including one scheduled for this spring — as out-of-town workers stay in area hotels, eat in local restaurants, and frequent local businesses. The plant’s economic impact cannot be disputed.

In recent years, Davis-Besse has also become a top industry performer in safety and efficiency, thanks to a highly competent staff and nearly $1 billion in investments. These include the installation of a new reactor head in 2011 and two steam generators in 2013. 

The plant’s value in addressing climate change will potentially make it a key asset in Ohio’s compliance arsenal for meeting the U.S. Environmental Protection Agency’s Clean Power Plan. Davis-Besse is capable of generating enough energy to power more than one million households with carbon-free electricity.

FirstEnergy takes great pride in delivering affordable power to our customers in an environmentally sound manner. Our customers’ monthly rates have increased by an average of less than $2 since 2009. We currently have among the lowest rates in Ohio.

We’ve accomplished this by always looking ahead to address market challenges that could drive up prices and threaten reliability. That’s why our plan is supported by customer groups of all sizes, advocates for low-income Ohioans, small businesses, organized labor, and schools. 

The time is now for Ohio to secure our in-state energy resources — and the economic benefits they provide to our communities.

Brian D. Boles is FirstEnergy Corp.’s site vice president of the Davis-Besse nuclear power station in Oak Harbor.


Read more at http://www.toledoblade.com/Op-Ed-Columns/2016/01/17/YES-The-plan-su...

Permalink Reply by Philip Brutz on January 20, 2016 at 8:17am

Should the state approve FirstEnergy’s rate plan?

NO: Ohio should pull the plug on utility bailouts

Ohioans should not have to pay above-market rates to subsidize plants that are no longer cost-effective

BY TODD A. SNITCHLER
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The rate hike proposed by FirstEnergy Corp. would guarantee profits on electricity generated at the Davis-Besse nuclear plant in Ottawa County and the Sammis coal-fired plant in Jefferson County. The Public Utilities Commission of Ohio is gathering testimony in the rate case and is expected to decide by March. Commissioners should say no. 

The plan is a raw deal for FirstEnergy’s ratepayers and the state’s environment. It would guarantee profits to the utility for outdated, inefficient plants, at a cost to consumers of $3.9 billion. And there’s no guarantee FirstEnergy will honor its commitments to reduce carbon pollution, invest in renewable energy, and promote energy efficiency.

PUCO should reject the proposal because this corporate bailout — and a request by American Electric Power — will destroy incentives for other power companies to invest in Ohio.

Several new, cleaner natural gas-fired power plants are planned or being built across the state. The $850 million Oregon Clean Energy plant, when it is completed, will have a 799-megawatt capacity. Another gas-fired power plant is under construction in Carroll County in northeast Ohio, at a cost of $899 million. 

At least four other gas-fired plants are in the works — some new, some conversions from coal. They represent significant investments that, once complete, will generate as much as 4,300 megawatts of electricity by 2019, all from cleaner, more efficient natural gas.

These are not FirstEnergy plants. They’re being built by independent companies that are willing to invest in Ohio because they can produce electricity at a lower cost to consumers and the environment. Thanks to deregulation and electric choice, independent power producers are choosing our state. 

They are employing thousands of Ohioans, including construction workers, and pumping millions of dollars into local economies and schools. These investments also are increasing power reliability, while lowering the cost of electricity for Ohio businesses and residential consumers.

That all changes if PUCO bails out FirstEnergy’s bad investments. Why would competitive companies invest billions of dollars to build plants if a competitor is guaranteed profits from outdated, inefficient plants? 

Why would any business consider locating or expanding in Ohio? Instead, smart business leaders will invest in states that support competition and lower energy costs.

FirstEnergy doesn’t like competition; it claims it needs this bailout to ensure energy reliability. It threatens plant shutdowns, warning that households and businesses will no longer have a reliable power supply. 

That isn’t true. According to recent PUCO projections, net power generation in Ohio will increase by more than 800 megawatts by 2020, because of gas-fired plants coming online.

Energy consultant William Pentland calls the FirstEnergy proposal an “unambiguous boondoggle.” He says it “makes a mockery of anyone who uses the adjective ‘competitive’ to describe the power market” and “would make a Bolshevik blush.”

Ohio’s consumers and businesses should not be forced to pay above-market rates to subsidize plants that are no longer cost-effective to operate. PUCO should pull the plug on utility bailouts.

Todd A. Snitchler is a former chairman of the Public Utilities Commission of Ohio and spokesman for the Alliance for Energy Choice, a nonprofit corporation that represents independent power producers and trade groups operating in Ohio.


Read more at http://www.toledoblade.com/Op-Ed-Columns/2016/01/17/NO-Ohio-should-...

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