Regulators near decisions on FirstEnergy, AEP rate deals


COLUMBUS, Ohio – Ohio utility regulators are nearing decisions on two proposed energy deals that have sparked fierce debate among consumer, business and environmental advocates.

The power purchase agreements submitted separately in December by Akron-based FirstEnergy and Columbus-based AEP have been the subject of television ad wars, email-writing campaigns, apps and web sites and mountains of written testimony.

The proposals ask regulators to permit rate increases over the next eight years to subsidize certain aging coal-fired and nuclear plants, modernize the power grid, reduce carbon emissions and guarantee profits. The Ohio Consumers’ Counsel estimates the settlements would cost consumers $5.9 billion combined over the duration – $3.9 billion for FirstEnergy and $2 billion for AEP.

Critics call the rate plans bailouts that flout Ohio’s decision to deregulate its electricity market and force power companies to compete on an open market. The companies and their allies argue the proposals will protect jobs and aid in the expensive transition to cleaner energy.

The Public Utilities Commission of Ohio could decide the cases by later this month.

Todd Snitchler, a former PUCO chairman who’s fighting the proposals, said the pushback – joined by such organizations as AARP, the Ohio Manufacturers’ Association and the Ohio Environmental Council – appears to be unprecedented.

“The public outcry over these proposed plans dwarfs any previous level of engagement by the public at the PUCO,” said Snitchler, who represents the Alliance for Energy Choice that organized delivery of 100,000 emails to utility commissioners, state lawmakers and Gov. John Kasich. “The deluge of messages is unprecedented.”

That’s in part because the proposals are coming at a time of sweeping change in the U.S. energy market: Natural gas prices have been at a sustained low, as a result of warmer than normal temperatures, record inventory and growth in production. The federal government is seeking to crackdown on greenhouse gases and set carbon emission targets for coal-fired plants. Growth in the renewable energy market is surging.

Independent power producers Dynegy and NRG Energy have asked federal regulators to intervene in Ohio, a request that’s still being weighed. The producers seek to void power purchase agreements that are allowing AEP and FirstEnergy to continue operating their older plants. Ohio argues it’s the state’s job to decide the proposals.

AEP spokeswoman Terri Flora said Ohio electricity customers would still have competition and choice, but the latest rate proposal is necessary to protect the power company’s assets as it transitions away from coal.

“Everybody has admitted that we have a flawed market, because it’s based on short-term views versus long-term investments,” she said. “Everybody knows these plants are effective. They’re environmentally effective and they’re efficient.”

FirstEnergy spokesman Doug Colafella added that estimates of consumer costs don’t account for money that will eventually go back to customers. FirstEnergy, for example, projects the plan would raise average monthly electric bills $3.25 the first year, but eventually deliver customers rebates totaling $560 million.

The five-member PUCO, dominated by Kasich appointees, has to balance support for the agreements – including some by its own staff – against the onslaught of critics. Kasich, who’s running for president, has said he won’t interfere but wants the outcome to keep Ohio’s electricity market stable and strong.

ArcelorMittal, the world’s largest steelmaker; BASF, the world’s largest chemical company; and Whirlpool, the world’s largest appliance maker, oppose the deal.

“The timing could not be worse,” ArcelorMittal Cleveland told utility commissioners in a letter last month.

“Competitive electricity markets in Ohio are working for the benefit of all Ohio electricity customers; these deals would be a major setback,” wrote Whirlpool.

Parties in the deals have taken their cases to the court of public opinion, through battling television and radio ads airing across the state.

In their spots, AEP and FirstEnergy emphasize the positives: retaining jobs, transitioning to greener power and providing clean, reliable and affordable energy.

One opposition ad features a pizza delivery guy who charges a customer $58 – because his car broke down and he needs her to pay for the repairs. Another has a waitress charging $20 for a cup of coffee. “I have a really old coffee maker, so I’m asking customers to help pay for it,” she says.

Dan Sawmiller, a spokesman for the Sierra Club, which supports the AEP plan, said the group was pleased that the company made commitments to transitioning from coal to renewable energy sources.

“We certainly don’t support bailing out the coal plants, but we’re willing to throw our sword down in order to meet our clean energy goals,” he said.

By Julie Carr Smyth

Associated Press

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