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Ohio Supreme Court Overturns FirstEnergy Customer-Funded Nearly $600 Million Bailout

Victory: Utility bailout attempts in Ohio continue to lose out to reason
W.H. Sammis coal plant, Stratton, OH

W.H. Sammis coal plant, Stratton, OH

Sidi762 / CC-BY 3.0
June 19, 2019
Columbus, OH —

Today, the Ohio Supreme Court overturned the Public Utilities Commission of Ohio’s approval of a FirstEnergy bailout that left customers footing a nearly $600 million bill. The bailout — misleadingly named the Distribution Modernization Rider (DMR) — has cost customers up to $204 million annually since it was approved in 2017, and, as the Supreme Court ruled, provided no guarantees the funds would go to grid modernization, nor that there were proper customer safeguards in place. Instead, those funds could be siphoned off from FirstEnergy’s Ohio utilities, and used to bail FirstEnergy Corp. out of its poor coal and nuclear investments. 

Rider DMR was the end result of a years-long attempt by FirstEnergy to secure customer-funded bailouts of its generation subsidiary, FirstEnergy Solutions, and its economically failing coal and nuclear plants. After FirstEnergy’s original bailout attempt was blocked by the Federal Energy Regulatory Commission for further review, FirstEnergy sought rider DMR — claiming it needed customers to pay to bolster its credit rating. While FirstEnergy portrayed the bailout as being necessary for grid modernization projects, none of the funding was contingent on or required to be used for modernization. Since FirstEnergy was granted rider DMR in 2017, FirstEnergy Solutions has declared bankruptcy and is now seeking a bailout of the company’s failing nuclear and coal plants at the Ohio General Assembly.

Neil Waggoner, Ohio Campaign Representative of the Sierra Club Beyond Coal Campaign, issued the following statement:

“Today’s decision is a victory for customers that have borne the burden of FirstEnergy’s unlawful bailout for the past two years.

“The decision further highlights the fact that FirstEnergy’s frequent and systemic bad decision making has led them to a point where they can only operate if Ohio electric customers are routinely bailing them out. The Court’s ruling overturns a FirstEnergy bailout that has cost customers hundreds of millions of dollars — a bailout FirstEnergy has sought to extend for two more years and would cost additional hundreds of millions of dollars — at the same time FirstEnergy Solutions is seeking a legislative bailout that will cost customers, again, hundreds of millions of dollars.

“The Court made the right decision. As such, maybe Ohio regulatory bodies and the state legislature should stop granting FirstEnergy bailouts.”

Shannon Fisk, Managing Attorney at Earthjustice, which represented Sierra Club before the Commission and the Ohio Supreme Court, issued the following statement:

“Bailouts shouldn’t be a business model for utilities. I am glad that the Ohio Supreme Court is blocking FirstEnergy’s attempt to force utility customers to pay for the Company’s bad business decisions. FirstEnergy wants massive corporate welfare and expects hardworking families in Ohio to pay for it. Ohioans want clean energy investments that will create jobs, not bailouts of aging and costly coal and nuclear plants.  Ohio should do more to boost its clean energy supply because it doesn’t create toxic pollution, safety risks, or harm the climate.”

Read the court decision.

Contacts

Shannon Fisk, Earthjustice, (215) 327-9922

Ricky Junquera, Sierra Club, (617)599-7048

Neil Waggoner, Sierra Club, (330)730-5109

Overruling Trump.