Jacqueline Roberts, chief of the PSC’s Consumer Advocate Division, questions FirstEnergy director of regulated generation Jay Ruberto before state Public Service Commissioners Brooks McCabe, Michael Albert, and Renee Larrick (left to right).
Jacqueline Roberts, chief of the PSC’s Consumer Advocate Division, questions FirstEnergy director of regulated generation Jay Ruberto before state Public Service Commissioners Brooks McCabe, Michael Albert, and Renee Larrick (left to right).
The state Public Service Commission began to hear testimony Tuesday in a hotly contested and controversial case over FirstEnergy’s effort to transfer one of its coal-fired power plants to a West Virginia subsidiary, a move that consumer advocates and environmental groups say is aimed at unloading an uncompetitive generation station onto ratepayers in the state’s regulated electricity market.
Commissioners began their formal evidentiary hearing after a brief, last-ditch effort at settlement appeared to fail. At the commission’s direction, more than a dozen lawyers for various parties disappeared behind closed doors, only to emerge about a half-hour later with no announced progress at reaching any sort of deal.
“This is a case of enormous public interest,” Commission Chairman Michael Albert told a packed hearing room at the PSC’s headquarters in downtown Charleston. “There are people who feel strongly both for and against this transaction.”
Akron, Ohio-based FirstEnergy wants to transfer its 1,600-megawatt Pleasants Power Station at Willow Island from its Allegheny Energy Supply arm to its West Virginia subsidiaries, Monongahela Power and Potomac Edison. The deal would move Pleasants from a competitive energy market to West Virginia’s regulated market, and requires prior PSC approval.
The companies say the $195 million deal would address a shortfall in generating capacity for Mon Power. The proposal includes a temporary “surcharge,” but the companies say related rate decreases will, in the end, result in $12 in annual savings to their average customer.
Critics of the FirstEnergy proposal say that the company’s promises of a rate decrease are based on overly rosy projections of the ability of the Pleasants plant’s future revenues. One witness for citizen groups filed prepared testimony arguing that the deal could end up costing ratepayers more than $400 million. PSC staff argue that the FirstEnergy proposal comes with “too many unknowns, variables and corresponding risks.”
In PSC cases, most of the evidence comes through prepared testimony that is filed prior to the in-person hearing. At the hearings themselves, lawyers for various sides focus on cross-examining other parties’ witnesses.
Tuesday’s hearing began with Jacqueline Roberts, chief of the PSC’s Consumer Advocate Division, cross-examining FirstEnergy Director of Regulated Generation Jay Ruberto about whether FirstEnergy had the transfer of the Pleasants plant to West Virginia subsidiaries in mind when Mon Power issued a “request for proposals” for how it might meet its projected future generation needs.
Roberts, for example, showed Ruberto the transcript of an April 2016 conference call in which FirstEnergy CEO Charles Jones said that the company already had “a model” for moving Pleasants from a competitive market to one where it would be protected by utilities regulators, the transfer of its Harrison Power Station into its West Virginia subsidiaries.
“I was aware that the CEO believed as he said here, that it might be appropriate,” Ruberto testified. “I’m aware of those earnings calls.”
Like the previous PSC cases involving the Harrison plant and American Electric Power moves to transfer its John Amos and Mitchell plants into West Virginia markets, the Pleasants plant case has drawn attention to the continued decline of the coal industry, in the face of the boom in low-priced natural gas and the increasing competitiveness of renewable sources of power.
“Buying a huge, 40-year-old coal plant, which effectively precludes Mon Power from ever acquiring any renewable resources, and virtually assures it’s going to continue [to be] almost 100 percent coal-fired,” James Van Nostrand, director of the Center for Energy and Sustainable Development at the West Virginia University College of Law, said during a PSC public hearing in Morgantown. “I can’t imagine a transaction that is less in line with the direction this state needs to go.”
The FirstEnergy proposal has the support of the West Virginia Coal Association and the state Business and Industry Council, but a group of large industrial energy users, under the name West Virginia Energy Users Group, has raised questions about the deal. Developers of gas-fired power plants in Brooke and Harrison counties have also raised questions about the proposal.
This week’s formal evidentiary hearing follows three public comment hearings in Morgantown, Parkersburg and Martinsburg in which more than 100 people turned out, with most of those speaking saying they opposed the FirstEnergy proposal. Commissioners also received nearly 2,000 written comments against the power plant transfer, and only about 45 in favor.
“Through these protests and the recent public hearings, the commissioners are getting the message loud and clear: West Virginians are tired of FirstEnergy’s bids for corporate welfare,” the group West Virginians for Energy Freedom, which formed to oppose the transfer, said on its website.
Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.
