On January 12, the Federal Energy Regulatory Commission (FERC) denied Ohio-based FirstEnergy’s request to transfer ownership of the Pleasants power plant to Mon Power, one of FirstEnergy’s regulated West Virginia utilities. Under FirstEnergy’s proposal, customers of Mon Power and Potomac Edison, another FirstEnergy-owned utility in West Virginia, would have assumed all of the plant’s costs and financial risks, while FirstEnergy and its shareholders would receive a guaranteed revenue stream.

The Pleasants deal needed approval from both FERC and the Public Service Commission (PSC) of West Virginia. Solar United Neighbors of West Virginia and West Virginia Citizen Action Group, represented by Earthjustice, challenged FirstEnergy’s proposal before FERC and the PSC. At FERC, SUN-WV and WVCAG argued that customers would be forced to cross-subsidize FirstEnergy’s corporate affiliates.

In its decision, FERC denied FirstEnergy’s proposal because of cross-subsidy concerns. In particular, FERC found that Mon Power’s December 2016 request for proposals for additional power plant capacity—which SUN-WV and WVCAG argued was biased in favor of the Pleasants plant—failed to meet federal standards.  “FERC rejected the Pleasants sale because of the risk that it would result in improper cross-subsidization among subsidiaries of FirstEnergy,” said Cathy Kunkel, an energy analyst with the Institute for Energy Economics and Financial Analysis. “Indeed, FirstEnergy clearly orchestrated the sale of the Pleasants plant in order to shift costs and risk from a deregulated subsidiary onto the customers of Mon Power and Potomac Edison.” 

Under this ruling, Mon Power would need to conduct a new RFP process if it still seeks to acquire additional power generation capacity.

“In this decision, the FERC commissioners—four of whom were appointed by the current president—unanimously rejected a brazen attempt to force Mon Power and Potomac Edison customers to guarantee profits for FirstEnergy and its shareholders. This is a major victory for West Virginia customers, who would have likely paid hundreds of millions of dollars if FirstEnergy’s scheme had succeeded,” said Michael Soules, an Earthjustice attorney representing SUN-WV and WVCAG.

The Pleasants deal would have cost the average residential household approximately $69 each year for the next 15 years, according to expert testimony in the case before the PSC. In total, that’s a net present value loss of $470 million that 530,000 Mon Power and Potomac Edison customers would be forced to bear.

FirstEnergy had expressed confidence to investors that the Pleasants sale would close in the first quarter of 2018. However, earlier this week, a lawyer for FirstEnergy, concerned that FERC might rule against the company, made an improper ex parte communication with one of the FERC commissioners in an attempt to influence the Commission’s decision.

“From its past history with the Harrison Plant sale to its sham RFP and misleading claims in the FERC and PSC cases on Pleasants, FirstEnergy has repeatedly demonstrated it prioritizes its bottom line and stockholders over consumers in West Virginia. This time, thankfully FERC stopped FirstEnergy in its tracks,” said Karan Ireland of West Virginians For Energy Freedom.

Read the FERC decision.