The Public Utilities Commission of Ohio intends to vote Thursday on a controversial energy deal being promoted by Akron’s FirstEnergy Corp. that would boost customers’ electric bills by keeping two older high-cost plants operating.
It is a high-stakes fight with big implications for Ohio and has drawn national attention and produced competing ad campaigns from consumer, business, energy and environmental groups.
FirstEnergy says its 1.9 million residential customers will pay an additional $3.25 a month for 750 kilowatt-hours for the first 31 months. Commercial and industrial users will pay more. But bills should start to shrink after 31 months. Critics say the bills could jump even higher, perhaps by as much as $11.46 a month over the next eight years.
“We strongly believe our plan will deliver significant benefits for Ohio customers and communities, and help reduce price volatility for years to come,” said FirstEnergy spokesman Todd M. Schneider. “The plan has been through an exhaustive review at the PUCO over the past year and a half. We’re hopeful the PUCO will consider the broad-based support for our plan, including the PUCO staff, low-income groups, small businesses, large industrial customers, schools and other energy suppliers.”
The commission will also vote on a separate request to subsidize similar high-cost power plants from Columbus-based American Electric Power.
The so-called electric security plans, if approved, could cost Ohio electric customers an estimated $5.9 billion over the next eight years, says the Ohio Consumers’ Counsel, the state’s residential utility advocate, and the Northeast Ohio Public Energy Council, the nation’s largest governmental utilities aggregation group. Some money from rate hikes will be rebated to customers later.
Opponents range from renewable energy providers, other utilities, the state’s largest industrial electric customers, environmental groups, the Ohio Manufacturers’ Association and the AARP. The Sierra Club is supporting the AEP request.
Critics describe the deal as a utility bailout and say the plan could affect competitive power auctions and hurt renewable energy and energy-efficiency programs.
The companies and their allies argue the proposals will protect jobs, guarantee safe, clean and reliable electricity and aid in the expensive transition to cleaner energy.
The proposals are supported by local governments including the city of Akron and labor unions anxious to maintain jobs.
The deal, if approved, would help FirstEnergy continue to operate the coal-fired W.H. Sammis plant on the Ohio River at Stratton in Jefferson County and the Davis-Besse nuclear plant on Lake Erie in Ottawa County.
The company says it cannot afford to keep the two plants operating without additional customer support.
FirstEnergy says that by preserving the two plants, customers will be protected from long-term price volatility.
Under the plan, Ohio Edison, Toledo Edison and the Illuminating Company would buy all the power generated by the two plants and would pay FirstEnergy Solutions whatever it costs to produce the power plus a 10.38 percent profit. That power would then be sold into the wholesale grid. FirstEnergy customers would have to pay the difference between cheaper gas-fired electricity and that energy covered in the deal.
The two plants together supply about a quarter of the electricity needed by FirstEnergy’s Ohio customers.
If the commission approves the pending requests, that would be a step away from industry deregulation, enacted by the Ohio legislature in 1999. FirstEnergy was a strong supporter of deregulation.
FirstEnergy and the PUCO staff had negotiated agreements on some key issues last fall.
Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.