By Ted Caddell and Suzanne Herel
Groups opposing FirstEnergy’s plan to win subsidies from Ohio regulators asked FERC last week to again intervene in the dispute (EL16-34, et al.).
The Electric Power Supply Association, Dynegy, NRG Energy and others filed a joint protest, asking FERC to block the company’s revised bid to win revenues from Ohio ratepayers for its merchant generation. The Sierra Club, the Environmental Defense Fund and the Ohio Consumers’ Counsel also filed protests.
FirstEnergy asked the Public Utilities Commission of Ohio in May to withdraw an eight-year power purchase agreement — in which the company’s regulated utilities would purchase output from the company’s merchant generators — after FERC ruled April 27 that the PPA, and one for American Electric Power, would be subject to its affiliate abuse review.
In its place, FirstEnergy wants Ohio regulators to approve a customer charge that it hopes would avoid triggering federal oversight (14-1297-EL-SSO). (See AEP, FirstEnergy Revise PPA Requests to Avoid FERC Review.)
The modified plan “would allow for the same transfer of captive customer money to market-regulated affiliates and shareholders, but without the affiliate PPA that initially triggered FERC jurisdiction,” the EPSA petitioners wrote last week. “In short, [First Energy Services] and the FirstEnergy [electric distribution utilities] are attempting to achieve the same result as their initial proposal, while evading the commission review mandated by the April 27 order.”
Dynegy and NRG also joined other independent power producers in a letter to the PJM Board of Managers last week, in response to a PJM white paper about resource investment in competitive markets. (See PJM Study Defends Markets, Warns State Policies Can Harm Competition.)
While they did not mention the Ohio situation specifically, the companies said PJM’s markets manage resource adequacy just fine on their own.
“What PJM’s markets have not done — and should not do — is provide protection for certain suppliers who want to be shielded from market risk,” the companies told the board. “Generators that are unable to compete because their facilities are inefficient or their operating costs are too high must make rational business decisions about their future operations, but PJM should not feel compelled to change its market rules to protect them.”
They further urged the RTO to educate policymakers about the negative effects their proposals can have when they interfere with the markets.
The Sierra Club urged FERC to “not allow this brazen end-run” around the commission’s review.
“With their latest gambit, FES and the FirstEnergy EDUs apparently think that they can achieve the same results as their initial plan while evading FERC review by simply eliminating the affiliate PPA,” the Sierra Club wrote. “The modified plan poses the same threat to the commission’s affiliate transaction rules as does the affiliate PPA.”
The Environmental Defense Fund filed similar arguments and spread the word through a blog post.
“It’s not usually a good idea to dis federal regulators,” wrote Dick Munson, EDF’s director of Midwest Clean Energy. “FirstEnergy doesn’t seem to care.
“The utility does deserve credit for persistence and creativity, yet its new proposal doesn’t even pass the laugh test,” Munson continued. “To avoid FERC jurisdiction, for instance, FirstEnergy now claims its subsidy will no longer guarantee the operation of its uneconomic power plants. Yet the utility’s new surcharge is contingent on the continued operation of virtually the same number of megawatts of its nuclear and fossil generation.”
Ohio Consumers’ Counsel Bruce Weston also weighed in, asking FERC to order FirstEnergy to “show cause why it should not be found to be in violation of the Federal Power Act, FERC’s [April 27] order and/or FERC’s affiliate restrictions regulations.”
FirstEnergy’s modified request “strictly involves adjustments to retail electric rates, which is designed to be solely under the jurisdiction of the PUCO,” company spokesman Doug Colafella said. “The objective of our plan — safeguarding our customers against long-term price increases and volatility — can still be achieved without a purchased power agreement.”