the Beacon Journal editorial board
FirstEnergy wasn’t kidding. The Akron-based power company must improve its financial position and maintain its credit rating, or risk deeper trouble, including the sale of the company during a period of consolidation in the utility industry. That is what drove its recent request for subsidies via the Public Utilities Commission of Ohio.
The commission initially approved a revenue stream deemed adequate by the company. Then federal regulators balked at the structure of the agreement. Unfortunately, the commission, in designing and approving a substitute plan, neglected an original provision that called for an equivalent financial result. It shrunk the subsidy.
Now FirstEnergy is scrambling to generate the necessary revenue. In doing so, it must add to earlier cost-saving steps, including reduced benefits and wage freezes. It recently canceled an electricity deal with the Northeast Ohio Public Energy Council, a consortium of communities representing 500,000 customers, arguing that the terms were more expensive than other similar arrangements.
FirstEnergy also has embarked on a larger “strategic review,” outlined by Charles Jones, the chief executive, in an earnings call with analysts last week. Jones talked about the company at a “crossroads,” with “some tough decisions” to make. One decision already in the works involves a return to full regulation.
That is where the company stood two decades ago, when Ohio noodled the idea of deregulating power generation. Once lawmakers gave their approval, FirstEnergy moved aggressively to comply. Without question, consumers have benefited, especially as an abundance of natural gas has pushed prices down. FirstEnergy has found the terrain rugged with its reliance on less competitive coal-fired and nuclear power plants.
More, FirstEnergy has company, American Electric Power and Duke Energy struggling in similar ways.
Will FirstEnergy find receptive minds at the Statehouse? Many lawmakers may be eager to remind the company about the choices it has made the past decade. They also can point to energy suppliers that have entered the deregulated market. What would be the fallout for such investment?
FirstEnergy wants lawmakers to move quickly. The moment also requires much care. Ideally, lawmakers would have at the forefront a strategy for the state in the emerging era of reduced carbon pollution, or the global effort to curb climate change. A strong argument can be made that a regulated structure would be more useful in meeting this epic challenge.
Nuclear power plants, for instance, are indispensable to such progress. So are markers for efficiency and renewable sources.
Akron has a giant stake in FirstEnergy and its future, something lawmakers should know, too. The company long has been a leading corporate partner. Its headquarters is a cornerstone of downtown, the company’s presence contributing significantly to the regional economy. Once lost or diminished, all that isn’t easily regained.
To see a summary of the Beacon Journal recommendations for today’s election, go to https://ohio.com/editorial/endorsements.