Critics Say FirstEnergy Plans Will Cost Customers In The Long Run | WOSU Radio

Critics Say FirstEnergy Plans Will Cost Customers In The Long Run

May 11, 2015

Supporters and opponents of a plan from FirstEnergy say it will cost customers more for the first three years, but that's where the agreement ends.

AEP tried it. Duke Energy tried. And now FirstEnergy is taking a swing at what’s known as a Power Purchase Agreement. This is a plan to pass part of the costs of operating power plants on to the ratepayers. 

The proposal would impact the Davis-Besse nuclear plant in Ottawa County and several coal plants. 

FirstEnergy’s Bill Ridmann says the typical ratepayer would see their monthly bill go up an average of $2.20 over the first three years. 

“But after the first three years under our projections—basically—we start to return money to customers and so it’s the returning the money to customers over the next 12 years of the plan—it’s a 15 year plan—where the benefits to customers come into play. And that’s worth $2 billion,” said Ridmann. 

Those are FirstEnergy’s estimates. But other groups are not convinced. The Ohio Consumers’ Counsel believes FirstEnergy’s plan would actually end up costing customers $3 billion over the course of 15 years. 

Dan Sawmiller is with the Ohio Sierra Club’s Beyond Coal Campaign. He has serious doubts over—what he calls—“incredibly rosy” projections. 

“And that’s why you see a $5 billion swing in what the different stakeholders in this case are claiming here. It’s important to keep in mind here that the FirstEnergy companies have a profit-driven incentive to make these rosy projections. This is a deal that bails out their generation company that is currently in a lot of trouble,” said Sawmiller. 

Sawmiller and the Beyond Coal Campaign has been a very vocal opponent of these Power Purchase Agreements, dubbing them bailouts for coal plants. 

Ridmann counters that argument by knocking down, several times, the term “bailout”. 

“It’s really not a coal bailout. As I’ve said ours involves not only coal plants but a nuclear plant also. It’s really not a bailout at all. It’s recognizing that you need diverse resources in order to provide reliability and cost stability in the marketplace. And it’s not a bailout whatsoever,” Ridmann explained. 

Besides projected savings, FirstEnergy says saving these plants would be a vital help to the communities in which they’re located. Ridmann says closure would have negative results on the local level. 

But Sawmiller doesn’t believe that reason is good enough. He says saving the plants is only delaying the inevitable, and that FirstEnergy should instead be creating a plan to transition workers to other career opportunities when those plants close. 

“The company is simply asking the commission to bail them out. And if you don’t bail us out then we’re going to shut it down and these people are going to lose their jobs. To me that’s incredibly unfair to the people working in these plants,” said Sawmiller. 

The PUCO rejected the Power Purchase Agreement plans filed by AEP and Duke. In its decisions, the commission laid out specific guidelines the utilities should follow if they want to get approval. 

Ridmann says FirstEnergy’s plan follows those guidelines closely and is confident that his company will succeed where others fell short. 

“I think from a policy perspective this is absolutely the right thing to do for the state of Ohio. I think it’s a very compelling case. I think for price stability, service reliability, I think it’s very important and very compelling for the state of Ohio to approve it,” said Ridmann. 

The PUCO’s decision for AEP and Duke was a big win for opponents of these Power Purchase Agreements. Sawmiller says they’re also seeing momentum in public opinion swing their way. 

“They’re very upset. And they’re looking for the commission to back them up and they’re looking for the consumers’ counsel to back them up and we’ve seen that from both of these agencies so far in these cases and we hope the PUCO will stay the course here,” said Sawmiller. 

The PUCO is about to hold official hearings on FirstEnergy’s plan and is expected to reach a decision later this year.