By Ted Caddell and Suzanne Herel

Exelon, which is seeking subsidies for its Illinois nuclear plants, has joined the opposition to FirstEnergy’s attempts to win guaranteed payments for its Ohio power plants. And it says it has a better offer.

In a filing with the Public Utilities Commission of Ohio, Exelon said regulators should reject FirstEnergy’s “grossly lopsided” power purchase agreement, proposing a competitive bidding process to supply the 3,000 MW for which FirstEnergy is seeking guaranteed rates (the combined value of FirstEnergy’s W.H. Sammis coal plant and its Davis-Besse nuclear station).

Exelon Director of Regulatory and Government Affairs Lael Campbell said the company would submit an offer providing “well over $2 billion in savings to Ohio families and businesses” compared to FirstEnergy’s proposed PPA.

“Today we are taking the unprecedented step of committing to offer into that competitive process at a price level that will guarantee billions in savings so that no one can misunderstand the gravity of the harm that would occur to Ohio customers if the commission approved” the FirstEnergy PPA, he said. “We are putting our money where our mouth is.”

The specifics of Exelon’s offer were redacted, but Campbell said it would be an eight-year fixed price for energy and capacity of about 3,000 MW that would come from “100% zero carbon resources” — nuclear, hydro, wind and solar facilities in PJM.

Exelon spokesman Paul Elsberg said there have been no further communications with PUCO regarding the offer.

FirstEnergy spokesman Doug Colafella said the Exelon offer ignores one of the fundamentals of the FirstEnergy offer — a way to secure power from in-state generators and the almost 1,000 jobs of those who work at the Sammis and Davis-Besse plants.

Exelon, he said, has “no plants in Ohio, no jobs in Ohio.”

AEP PPA

PUCO also is considering a settlement calling for eight years of guaranteed rates for some of American Electric Power’s plants. Exelon said time constraints prevented it from making a similar offer in that case.

“Exelon requested additional time to file testimony in the AEP case, but the motion was not granted,” Elsberg wrote in an email. “The arguments made by Exelon against the First Energy proposal apply equally to the AEP proposal.”

Last week, PUCO ruled that the Sierra Club, IGS Energy and Direct Energy must submit to questioning to explain why they are supporting the AEP proposal.

PJM Urged to Oppose PPAs

On Jan. 6, the PJM Power Providers Group (P3) and the Electric Power Supply Association sent a letter to the PJM Board of Managers urging the RTO to actively oppose the AEP and FirstEnergy PPAs, contending they would undermine PJM’s competitive electricity market.

Last month, PJM submitted testimony to PUCO, saying the PPAs needed changes to preserve competition and the state’s ability to attract merchant generation. PJM has said it plans to issue a market analysis of the PPAs this spring, but that may be after the commission renders a judgment. (See PJM Seeks Changes to AEP, FirstEnergy PPAs.)

P3 and EPSA said the RTO’s actions were too little, too late.

“In testimony recently submitted to the PUCO long after the cases were underway and the dangers known, PJM indicated that PJM did not take a position on these nefarious efforts to undermine PJM’s markets,” they wrote. “Rather than advising the PUCO on the devastating impacts to the market in the short and long term, PJM instead sent a message that these subsidies would somehow be acceptable if certain conditions were attached.”

The groups said that the RTO is leaving the commission to evaluate the proposals “in a vacuum.”

“PJM should not be afraid to say when a program being considered at the state level directly undermines the wholesale market,” it said. “One would expect that the Ohio commission, while reserving the opportunity to disagree, would welcome the input of PJM on the full ramifications of what has been proposed.”

The groups said the reliability and competitive prices provided by PJM “will evaporate if the market is corrupted by state actions that subsidize uneconomic units.”

PJM declined to comment on the letter.

Pablo Vegas, president and CEO of Ohio Power Co. (AEP Ohio), responded to the letter with his own to PJM, saying P3 and EPSA were wrong to accuse the company “of undermining the very markets AEP Ohio has long sought to support and improve.”

“AEP Ohio has carefully worked to confine the proceedings before the PUCO … to matters of retail rate recovery,” he said.

He noted that PJM historically has refrained from “intruding upon retail ratemaking proceedings — or attempting to influence retail policies,” and urged it not to deviate from that precedent.

In a Jan. 7 order, PUCO denied PJM’s request to be a late intervenor in the AEP case but invited the RTO to submit a friend of the court brief to outline its concerns and make recommendations.

Exelon’s Campbell said FirstEnergy was a champion of the competitive process until now. “Ironically, FirstEnergy led the drive to competition and up until this proceeding took positions before this commission and other agencies and public officials which embraced competition and retail choice,” Campbell testified. “FirstEnergy was right then; it is wrong today.”

Exelon Seeks Relief for Ill. Nukes

While it is opposing FirstEnergy’s PPAs in Ohio, Exelon is seeking relief for its nuclear generators in Illinois. The company has requested that Illinois expand its clean energy subsidies to include nuclear power alongside wind and solar energy.

A bill backed by Exelon stalled in the Illinois legislature last year. Those critical of the Exelon subsidies have called them a nuclear “bailout” and said they would cost ratepayers around $300 million annually in surcharges.

In November, Exelon announced it has delayed for a year a decision on whether to mothball its Clinton reactor. (See Exelon Defers Clinton Closure; MISO Hints at Changes.)