FirstEnergy wants its 1.9 million Ohio residential customers to pay higher fees to keep two of its least-competitive power plants in operation for another 15 years.
And depending on whom you believe, the proposal could save customers $2.1 billion over the long term, or cost them $3.1 billion.
The company’s request before the Public Utilities Commission of Ohio would allow continued operation of the two higher-cost plants, although less expensive energy may be available today on the open market.
The company says it cannot afford to keep the two plants operating without additional customer support.
If the company wins approval, customers would pay on average of $42 more per year, or $400 million overall for the next three years to keep open the Davis Besse nuclear-powered plant near Toledo and W.H. Sammis coal plant on the Ohio River. The average monthly residential bill would rise from $96 to $99.50.
Grid power prices will rise in the future and produce a future savings of $2.1 billion for customers, FirstEnergy says.
Keeping the two plants running will help in case of polar vortexes and summer heat waves, which can cause sharp increases in electric demand and prices on the open market, the company says.
The two plants have a history of high maintenance and operational costs but together supply about a quarter of the electricity needed by FirstEnergy’s Ohio customers.
Davis Besse was shut down from 2002-2004 by the worst corrosion ever found in a reactor in the United States. The company has spent billions in the last decade on repairs and new equipment. Its federal license expires in 2017. FirstEnergy is seeking a renewal for 20 years.
The Sammis complex includes a $1.8 billion clean-air system that removes a variety of pollutants from the coal-fired boiler exhaust. The scrubber system was completed in 2010.
Meanwhile, cheaper electricity often is available on the market as new power plants, fueled by the abundant supply of new-found natural gas, come online in Ohio and other states. That lower-cost electricity is available through auctions that are a part of Ohio’s deregulation initiative in 1999.
Concern for stability
FirstEnergy’s proposal for what’s called an electric security plan is getting strong support from government and labor leaders stretching from Toledo to the Ohio River. The city of Akron supports the proposal, as do many large industrial electric users who have signed deals with the utility.
FirstEnergy says that by preserving the two plants, customers will be protected from long-term price volatility.
Volatility could become a bigger problem as the industry shuts down many coal-fired plants that are part of the 24-hour-a-day supply grid due to federal clean-air rules, FirstEnergy said.
That puts Ohio’s energy future “even more at risk and increasing retail prices for customers,” the company said.
Opposition groups are lining up, and the PUCO already has rejected similar requests from American Electric Power and Duke Energy Ohio.
The Ohio Consumer’s Counsel, the state’s residential utility advocate, and the Northeast Ohio Public Energy Council, the nation’s largest governmental utilities aggregation group, say the proposal will cost consumers $3.1 billion in added charges over those 15 years.
“It’s a confusing and complicated case that most people are unaware of… but it will have big ramifications for Ohio electric bills for a long time,” said attorney Trent Dougherty of the Ohio Environmental Council, a statewide eco-group that is opposing FirstEnergy’s request.
Other opponents are the Sierra Club, American Association of Retired Persons and businesses including Lowe’s Home Improvement, Staples Inc., Macy’s Inc., Walmart Stores Inc. and Sam’s Club.
Critics call the proposal a bailout for FirstEnergy. They say it violates state laws on energy deregulation, could affect competitive power auctions and hurt renewable energy and energy-efficiency programs.
Davis-Besse and Sammis are base-load plants, which means they are capable of producing power 24 hours a day, seven days a week. They account for about 3,200 megawatts of power, or 25 percent of what FirstEnergy needs for its regulated distribution companies: Ohio Edison, Cleveland Electric Illuminating and Toledo Edison.
And, according to FirstEnergy, the plants should stay open because they produce $1 billion in annual statewide economic impacts and nearly 3,000 direct and indirect jobs.
If the commission takes a new approach by approving the request, this would be a step away from industry deregulation, enacted by the Ohio legislature in 1999. FirstEnergy was a strong supporter of deregulation and it collected nearly $7 billion in so-called stranded costs at that time.
Ohio utilities no longer can own both generating and distribution operations. Companies were reorganized to comply.
By law, Ohio Edison, the Cleveland Electric Illuminating Co. and Toledo Edison are required to buy their power in competitive auctions.
The proposal would create an exemption, committing the three distribution companies to buy all the power generated by Davis-Besse and Sammis for the next 15 years at whatever cost, plus a guaranteed level of profitability. It would provide coal and nuclear stability for FirstEnergy.
The three FirstEnergy companies would also purchase electric power from FirstEnergy’s share of Ohio Valley Electric Corp. coal-fired facilities in Gallipolis and Madison, Ind. It owns an interest in those plants that were developed in the 1950s by a coalition of utilities to serve the Atomic Energy Commission and its now-closed uranium-enrichment facility at Portsmouth.
All testimony from parties that have intervened in the case must be filed by Monday. The PUCO staff will file its testimony by May 29. An evidentiary hearing is scheduled to begin June 15 at the PUCO offices in Columbus.
There is a change at the PUCO that could impact the FirstEnergy request.
On April 11, the five-member board got a new chairman: Andre Porter, a native of Alliance.
He was appointed by Kasich to replace former chairman Tom Johnson, who stepped aside as chairman and remains on the board.
Porter is an attorney, former head of the Ohio Department of Commerce and former member of the PUCO from 2011-2013.
Bob Downing can be reached at 330-996-3745 or email@example.com.