You see, FirstEnergy's current rate ripoff scheme is just a small part of their long-term, grand design to manipulate markets, laws, and administrative processes in a number of venues in order to produce incredible financial windfalls for the company. FirstEnergy put quite a lot of thought into machinations that would beat their competitors at the EPA coal plant closure game and manipulate the situation into a financial benefit for the company. FE's stockholders may see it as great business sense, but for Ohio's electric consumers, it's a huge financial loss. Whether FE will get away with pushing the legal envelope, or whether evidence of possible misdeeds will begin to float to the surface like untethered bodies, remains to be seen.
It started several years ago with FirstEnergy's acquisition of Allegheny Energy and its plethora of scrubbed coal generation. Tony the Trickster admitted as much on some annoying idiot's TV talk show. He claimed that the EPA's new rule will benefit FirstEnergy, while other companies, like AEP, were wasting their time whining and trying to lobby the rules away. Here's how FE's plan worked:
1. Acquire bigger footprint and additional scrubbed coal generation capacity.
2. Close un-scrubbed coal plants several years earlier than necessary, on very short notice, and create localized capacity shortages (especially in FirstEnergy's home base of Ohio).
3. Generation shortage will drive capacity prices in ATSI up more than double those in the rest of the RTO. FirstEnergy will be the beneficiary of increased capacity prices.
4. Closures will result in reliability issues.
a. Possibility for very profitable "Reliability Must Run" contracts to keep plants slated for closure open until reliability solutions can be implemented.
b. Propose $1B in new transmission "reliability" solutions to be owned and constructed by FirstEnergy that source to other existing FirstEnergy-owned generation in order to lock in future market domination. The transmission will predominantly become the financial responsibility of consumers in the ATSI zone, and will consist of many small upgrades to FirstEnergy-owned transmission so as to avoid any competition for projects under FERC's Order 1000.
5. File Ohio rate case to lock in all that juicy profit and rush it through approvals!
6. Engage powerful competitor in silly tit-for-tat PR battle over their own rate case, in order to focus attention elsewhere.
Here's what's turned up in FE's Ohio rate case:
Read the brief of the Ohio Consumer's Counsel. This agency, tasked with representing the interests of Ohio's residential ratepayers, was chopped and crippled by Ohio's Governor last year. The ever-struggling OCC claims that FE, with the assistance of PUCO, rushed their case through the process and disenfranchised the public. FE sought waiver of many important rules and kept evidence to a minimum. FE engineered an upfront settlement with certain parties, who all received kickbacks for their cooperation. No parties representing residential ratepayers were included in the settlement, leaving the ratepayers without representation and bearing the cost of the kickbacks the cooperating parties received. FE's switch to a three-year auction leaves ratepayers at risk of higher prices. Sure, your rates may be "stable," but that will be stably HIGH. FirstEnergy's generation affiliates will substantially benefit from the three-year auction. A distribution rider produces excessive cost to consumers and locks FirstEnergy into a guaranteed revenue stream without rate transparency. FirstEnergy escapes Ohio's "significantly excessive earnings" test. FirstEnergy's claimed "benefits" for consumers are nothing but smoke and mirrors.
Read the brief of AEP Retail Energy Partners. Be sure not to miss their handy-dandy table of all the settlement parties who financially benefited from their support of FE's plan, how much they got, and who gets to pay for it (mostly Ohio's residential ratepayers). See also AEP's arguments about how FE is, in fact, the one stifling competition in Ohio by locking customers into purchasing FE's generation. So much for a level playing field, FE, you little fibber! And this -- it's such a great line, I've got to quote it:
"In effect, what is presented to the Commission and the ratepayers of the FE EDUs is much like a bad sequel. Even if one liked the original movie, there is no assurance that the sequel will be equally enjoyable. Unlike a movie, however, the FE EDU customers must stay to watch, once they have paid."
But probably the most stunning evidence submitted in the case comes from The Sierra Club's brief. The brief details how FE severely underbid energy efficiency into PJM's RPM auction. FE's failure to bid even the minimum amounts of EE required by state law into the auction artificially drove up ATSI's capacity price in PJM's 2015/16 auction. FE's gaming of EE capacity cost ATSI consumers $600M in unnecessary capacity costs and prevented them from realizing an additional $39M in revenue!
But, what will all this mean for Ohio consumers if FE's plan is approved? You're going to be paying more... lots more!
FirstEnergy has a bunch of hungry mouths to feed, such as:
CEO "Tony the Trickster" Alexander, who pulled in $18.3M in total compensation in 2011, according to FirstEnergy's SEC Proxy filing.
CFO Mark Clark, who pulled in $6.6M in 2011.
General Counsel Leila Vespoli, who pulled in $5.5M in 2011.
Charles Jones, President of FE Utilities, who pulled in $4.7M in 2011.
And then there's FirstEnergy's dead weight, retired executives, who still have their hand in the till:
Gary Leidich, who walked away with $4.4M in 2011.
Paul "Mr. Burns" Evanson, who walked away with the big prize - $14.4M in 2011.
So, while you're struggling to pay your increased electric bill in the future, remember how hard your friends at FirstEnergy are also "struggling."
If you've heard that the EPA is causing your electric bill to "skyrocket," you're getting incorrect "information" spoon-fed to you by propagandists with an agenda. You need to work a little harder to get the unvarnished truth. The truth is that your Ohio electric bill is going to "skyrocket" because of the financial scheming of FirstEnergy.
Remember, while all those TV commercials are kinda funny, the real story can only be found elsewhere.