"Ohio law requires utilities to generate a percentage of power through renewable energy or buy credits from people and organizations that do.
The cost of renewable-energy credits can be passed on to consumers, but fines cannot. Rather than pay fines, FirstEnergy bought credits at prices higher than anywhere in the country, before or since, an independent audit found."
So, why should you care about what happens in Ohio? Because another of FirstEnergy's money-making schemes caused by Ohio's regulatory environment is going to cause huge rate increases for their West Virginia customers. FirstEnergy is outta control. The latest scheme involves dumping the liability of their Ohio subsidiary's ownership of several coal-fired generation plants into West Virginia's regulatory system through a "sale" of these assets to their West Virginia subsidiaries. Pam Kasey at the State Journal does a fabulous job explaining this scam. Bill Howley at The Power Line also has some rather bald criticisms about FirstEnergy's latest scam. And to top it all off, FirstEnergy is merely copycatting AEP's earlier plan do the same thing with its Ohio subsidiary. Once again, the consumers are the ones who get pelted with corporate dodge balls.
Just this year, FirstEnergy gamed PJM's capacity auction to increase their profits through strategic closing of coal plants to create capacity shortages and increase prices, force RMR contracts at plants it owns, and propose $1B of new transmission to move generation from its own plants into Cleveland. FirstEnergy also gamed the market by failing to bid energy efficiency into the auction. There's FirstEnergy again, manipulating a statute in order to squeeze money out of it and turn what should have been a consumer asset into a consumer liability.
Then came the silly TV commercial battle in Ohio over AEP's proposal to jack up capacity charges that its competitors would have to pay. FirstEnergy focused on AEP's rate case to distract attention from its own, where the PUCO Santa Claus delivered everything on FirstEnergy's wish list. In the end, PUCO cut AEP's requested capacity rate in half, but also granted FirstEnergy their wish to pay a much lower rate. The difference between what AEP can charge and what FirstEnergy has to pay was, of course, added to consumers' bills. This enables FirstEnergy to continue to offer lower rates that encourage AEP's customers to switch suppliers -- but the consumers end up paying the difference somewhere else, so the rates aren't really "lower."
Earlier this year, a "prairie fire" of public outrage caused PUCO to rescind its approval of AEP's rate case and start over. Many accused PUCO of being biased toward AEP. Nothing could be further from the truth -- PUCO is currently stacked with commissioners who are biased in favor of FirstEnergy. FirstEnergy has set themselves up to do whatever they want in Ohio's regulatory system, and this means consumers will pay more.
So, what's the difference between FirstEnergy and AEP? They're both shameless money grubbers, always seeking to increase their quarterly profits for the benefit of shareholders at the expense of the consumers they supposedly "serve." Perhaps this article will provide a little insight into what makes FirstEnergy just a little more despicable.
"AEP, based in Columbus, is quiet and careful, run by an electrical engineer. FirstEnergy, based in Akron, has a scrappy reputation and is run by a tough-talking lawyer."
“Historically, AEP always has been thought of as a very top-hat, well-managed company, and FirstEnergy did not have that reputation,” said OSU’s Jones.
But the past few years have been much more chaotic. FirstEnergy has shown itself to be nimble in a rapidly changing market, Mason said.
“Using a football analogy, (FirstEnergy) has learned to run the spread offense, and AEP is primarily a solid team with a big line and great running game,” he said."
It's an observation that was made 18 months ago in the first Formal Challenge to PATH's rates -- that Allegheny (now absorbed into the FirstEnergy empire) was the source of most of the accounting mistakes and imprudent expenses recovered from ratepayers in error.
"The advertising, lobbying, and imprudent expenditures are all the more glaring when compared with the similar TrAIL project expenses. Many of the same contractors and one of the same parent companies were involved in the TrAIL project.... Most of these same objectionable strategies began during the TrAIL project, under the management of one of PATH’s parent companies, Allegheny Energy.... a comparison helps to illustrate the manner in which this company has transgressed.... In fact, we now suspect that if this same process were to be embarked upon concerning TrAILCo.’s Formula Rate, substantially similar errors and imprudent expenditures
would quickly make themselves evident. We would urge the Commission to require a thorough review of all of Allegheny Energy’s rate recovery processes, as the party in common on both projects."
FirstEnergy is just a little more eager to tippy-toe along the borders of legality, hoping to get away with these continual consumer ripoffs. It's risky business, because with each episode of questionable business practices, FirstEnergy makes a few new enemies. When your closet is bulging with skeletons, a few are bound to come tumbling out at the most inopportune moments. FirstEnergy's enemies are watching and waiting because the big scandal that FirstEnergy will be unable to recover from is coming.