By Ted Caddell

The Public Utilities Commission of Ohio agreed Wednesday to hear FirstEnergy’s arguments for why it should be able to withdraw its controversial power purchase agreement and substitute a new plan.

It also granted all of the applications for rehearing sought by opponents of the PPA, including the Electric Power Supply Association, the Ohio Consumers’ Counsel, the Environmental Defense Fund, the Sierra Club, the Retail Energy Supply Association and the PJM Power Providers Group.

“Because of the number and complexity of the assignments of error raised in the applications for rehearing, as well as the potential for further evidentiary hearings in this matter, we find that it is appropriate to grant rehearing at this time,” the commission said (14-1297-EL-SSO). “This will allow parties to begin discovery in anticipation of potential further hearings.”

Although its rehearing request also was granted, the EDF protested the ruling.

“So, without listening to the arguments against the deal, the PUCO rubberstamped [FirstEnergy’s] request for a rehearing,” the EDF’s Dick Munson wrote in a blog post that went up within minutes of PUCO’s order.

Both FirstEnergy and American Electric Power were granted eight-year PPAs after more than a year of legal wrangling. But their victories were short lived, as FERC ruled that the agreements would require a review that could nullify them.

Opponents Sound Off

On Thursday, PUCO received a stream of filings against the modified FirstEnergy plan, including those from the Ohio Energy Group, the Northeast Ohio Public Energy Council, the Sierra Club, the PJM Power Providers Group (P3) and the Electric Power Supply Association.

P3 and EPSA accused FirstEnergy of doing an end-around play to avoid review by FERC. FirstEnergy, they said, is wrongly “attempting to use the commission’s application for rehearing process to circumvent the FERC order.”

“FirstEnergy, however, has made a mistake in how it presented its new PPA proposal to this commission,” they wrote. “FirstEnergy did not include or mention its new proposal in its application for rehearing, robbing the commission of jurisdiction over the proposal in this proceeding. This means that the commission cannot grant rehearing on the proposal and, contrary to its May 11, 2016, action, cannot reopen this proceeding to allow discovery on the proposal. The proposal is dead on arrival and the commission must follow the law by not exercising jurisdiction through rehearing.”

The Sierra Club also filed in opposition to the FirstEnergy plan.

“While FirstEnergy is trying to put old wine in a new bottle to escape review under federal customer protection standards, its latest shareholder bailout proposal is the same bad deal for Ohio customers,” said Shannon Fisk, managing attorney at Earthjustice, which represents the Sierra Club. “FERC smartly put a hold on FirstEnergy’s bailout so that customers would not be losing money while the legality of the bailout is fully reviewed. PUCO should not sign off on FirstEnergy’s brazen effort to evade FERC’s order.”

Thursday was also the deadline for arguments against AEP Ohio’s request to modify its PPA, and that docket also swelled with filings from opponents.

FERC ruled April 27 that the PPAs — in which AEP’s and FirstEnergy’s regulated utilities would purchase output from the companies’ merchant generators — must be reviewed under the Edgar affiliate abuse test (EL16-33 and EL16-34).

AEP CEO Nick Akins said after FERC’s ruling that the company would either lobby Ohio lawmakers to reregulate the state’s electricity market or sell off its Ohio fleet rather than submit to FERC review. FirstEnergy CEO Chuck Jones has also said he would welcome reregulation. (See All Eyes on AEP, FirstEnergy with Ohio PPAs in Doubt.)

Both utilities then filed for rehearing with PUCO. FirstEnergy asked the commission to withdraw its PPA and replace it with a customer charge that would still protect its aging power plants. Munson called FirstEnergy’s new plan “sleight of hand” and said PUCO’s decision Wednesday “suggests commissioners care more about appeasing a politically connected company than protecting customers or considering both sides of an argument.”

AEP Request

AEP scaled back its original request for PPAs for all of its 3,100-MW Ohio merchant fleet, asking PUCO for an agreement covering only its 440-MW share of the Ohio Valley Electric Corp. (14-1693-EL-RDR, 14-1694-EL-AAM). AEP said it will stand by its commitment to develop 900 MW of renewable energy — a promise that convinced the Sierra Club to sign on to its plan — with certain provisos.

On Thursday, the Office of the Ohio Consumers’ Counsel and the Appalachian Peace & Justice Network jointly filed a memorandum urging PUCO to deny AEP’s request to change its “electric security plan” (ESP).

“Even though AEP Ohio appears to have shuttled its plans for an affiliate PPA, in light of FERC’s rulings, it nonetheless has come up with another way to extract money from customers,” the two organizations wrote. They said AEP Ohio’s idea to seek a PPA covering only the OVEC portion of its generating fleet was already denied once by PUCO in a 2015 decision. “There is no reason to stray from that decision,” they wrote. PUCO at that time, they said, ruled that a OVEC-only PPA rider “would not provide a sufficiently beneficial financial hedge, or other commensurate benefits, to AEP Ohio’s customers to justify approval.”

“The PUCO should also consider that when AEP Ohio negotiated the OVEC contract, it agreed to an allocation of risk regarding Capacity Performance penalties and bonuses,” the groups argued. “The PUCO should not undo the deal that AEP Ohio itself struck by bailing it out from the agreed-to risk allocation and imposing the risk on customers.”

The groups also argue that PUCO’s rules don’t allow AEP Ohio to modify the ESP. It only allows it to accept PUCO’s modifications or withdraw and terminate its entire request, they said.

P3 and the Electric Power Supply Association also argued that AEP’s rehearing request and “rehashed proposal” should be denied, also noting PUCO’s 2015 ruling.

“With the affiliate PPA removed from the PPA rider, AEP Ohio is left with only its OVEC entitlement — a construct this commission expressly rejected in 2015,” they wrote. “The commission should deny AEP Ohio’s application for rehearing, reverse its approval of the stipulation and terminate this hearing.”

The Mid-Atlantic Renewable Energy Coalition filed a memo supporting AEP’s rehearing request, saying it is necessary to “preserve the significant public policy benefits” of the original renewable energy agreements.