Energy Efficient West Virginia (EEWV) is opposing Mon Power and Potomac Edison’s recent proposal to the West Virginia Public Service Commission (PSC) to purchase coal plants from another subsidiary of their parent company, FirstEnergy.
EEWV argues that the utility’s plan is unnecessary and will expose ratepayers to additional risk.
The utility has proposed to purchase 80 percent of the Harrison Power Plant, an additional 1477 MW of coal-fired capacity, and Mon Power already owns 20 percent of the plant, according to a release from EEWV.
Harrison was constructed in the early 1970s and the 80 percent interest in the plant to be transferred is currently owned by Allegheny Energy Supply Co., which is also owned by FirstEnergy.
The FirstEnergy companies’ plan would raise residential rates by about 2 percent, in addition to eliminating what would otherwise have been a nearly 5 percent residential rate decrease for 2013, according to EEWV.
The company is requesting fast-tracked regulatory approval by mid-April, but the West Virginia Citizen Action Group (WVCAG), a member of the EEWV coalition, will urge the PSC to oppose the proposal.
“FirstEnergy has requested a ridiculously short timeline for the PSC to scrutinize this proposal,” executive director of WVCAG Gary Zuckett said. “FirstEnergy is proposing a long-term deal that will lock its West Virginia customers into owning and operating this coal plant for at least another decade.”
He said according to its own filings at the PSC, there are no cost savings for state customers.
“The plant is actually a long-term liability that they want to unload onto West Virginia where it will be guaranteed to recover its cost regardless of whether or not it’s competitive.”
The proposal would reduce financial risk for FirstEnergy because it will allow the plant to recover its operating costs plus profit in the state’s regulated electricity market, according to EEWV, and if the proposal is not approved, the plant will continue to sell into a deregulated electricity market where it has to compete with other generators.
Due to low natural gas prices, coal-fired electricity production is currently more expensive and coal generation has been driven to record lows.
EEWV says on the regional electricity grid, PJM, coal generation in the first half of 2012 was 10 percent lower than the same period last year; FirstEnergy’s profits fell 20 percent in the third quarter in 2012, in part due to the reduced profits in the competitive electricity market.
Both Mon Power and Potomac Edison were required to file a long-term “Resource Plan” with the PSC earlier this year. According to the company’s estimates, the cost of purchasing the Harrison plant offers no long-term financial advantage to customers compared with continuing to purchase power from the regional electricity market.
West Virginia’s other major electric utility, Appalachian Power, is similarly planning to purchase 1647 MW of existing coal plants from a deregulated subsidiary of its parent company, American Electric Power. Their proposal is expected to be filed with the PSC next month.
FirstEnergy’s Resource Plan failed to evaluate an expansion of the company’s energy efficiency programs to help meet future energy needs, even though reducing demand through energy efficiency is a low-cost and low-risk option for meeting electricity needs, according to EEWV. Mon Power and Potomac Edison currently have one of the least ambitious energy efficiency programs in the country.
FirstEnergy’s proposal highlights the need for a robust integrated resource planning process, according to EEWV. With an integrated resource planning process, utilities would be required to regularly file with the PSC long-term plans analyzing a range of scenarios to show how they can meet future electricity demand at the lowest cost, considering both energy efficiency and traditional power plants. In states with strong IRP requirements, this creates a more proactive process for the PSC and other stakeholders to scrutinize all options available to the company to make sure that the company’s long-term investment decisions are in the best interest of electricity customers.
EEWV will be urging the PSC to reject FirstEnergy’s proposal.
For more information, visit www.eewv.org.
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