Ohio Commission Faced With Yet Another Proposal to Bail Out FirstEnergy Corp

Yesterday, the Public Utility Commission of Ohio (PUCO) Staff proposed a new rider in FirstEnergy’s refiled bailout case that could essentially force customers to pay $131 million per year to bail FirstEnergy Corp. out for its bad coal investments.  While the Staff frame their proposal in terms of grid modernization, the apparent absence of any requirement that FirstEnergy invest the money on modernizing the grid means that this new proposal is effectively just another corporate bailout.  Represented by Earthjustice, Sierra Club will continue to oppose such a bailout.

At the end of April, the Federal Energy Regulatory Commission (FERC) rescinded the waiver that previously allowed for affiliate dealings between FirstEnergy and their generation affiliate company. That put into question FirstEnergy’s previous bailout proposal that was approved by PUCO in March, which conflicts with federal restrictions on affiliate transactions.  In response, FirstEnergy is seeking PUCO approval of a modified version of its bailout proposal that purports to avoid FERC review.  In filings pending at FERC, Sierra Club and others have urged FERC to reject this attempted evasion and make clear that the modified bailout proposal would be reviewed under federal affiliate transaction requirements.

In the latest twist in this long-running saga, the PUCO Staff’s testimony filed yesterday proposes that the Commission reject FirstEnergy’s modified proposal and, instead, approve a “Distribution Modernization Rider.”  Under that Rider, customers would be forced to pay FirstEnergy $131 million per year for three to five years to provide “credit support” to FirstEnergy Corp.  What the Rider does not appear to do, however, is require that the customer money be spent on distribution modernization.  Without such an expressly written restriction, there is no assurance that these customer funds would be invested in grid modernization projects. Such projects could save customers money in the long-term, while encouraging innovation and market access for cost-effective supply- and demand-side retail electric service; including, but not limited to, demand-side management, time-differentiated pricing, and distributed renewable energy generation. In a separate docket, FE has submitted a Grid Modernization Business Plan as required by the stipulation regarding the original bailout proposal.

“If the Commission wants to achieve the worthy goal of modernizing the grid, it must require that any customer money provided to FirstEnergy under the Staff’s proposed rider be invested in grid modernization,” said Shannon Fisk, Managing Attorney at Earthjustice. “Unfortunately, it appears that Staff’s proposed rider would instead just bail FirstEnergy Corp. out of its bad coal investments.”

“The proposed grid modernization effort outlined in Staff’s testimony lacks any detail.  Furthermore, the grid modernization plan filed earlier this year by FirstEnergy speaks to initiatives that the company is already undertaking and any future investment decisions are deferred to a collaborative process that is ill-defined in terms of its objectives and timeline,” said Dan Sawmiller, Senior Campaign Representative for Sierra Club’s Beyond Coal Campaign. “Staff’s recommendation is effectively to bail out FirstEnergy for poor investment decisions related to coal-fired power plants.  While Sierra Club supports transition planning that protects electricity customers and Ohio’s working families, FirstEnergy’s customers aren’t getting that with this recommendation.”