While Byron says he opposes FirstEnergy's proposal to sell one of the company's competitive market coal plants to captive West Virginia electric consumers, his main concern seems to be the price of the plant, and not the purchase of the plant.
Host Bray Cary gets way off track and Byron doesn't take control of the situation to re-direct back to a coherent argument. Cary is one of those individuals who is so terrified of accounting that he views corporate accountants as "tricky" and "sneaky." He dubs the transaction "corporate hocus pocus" and believes it's "purely bookkeeping."
Bookkeeping is a scary concept for people like Bray Cary, who believe bookkeeping doesn't involve real money. However, FirstEnergy's coal plant sale is going to cost you real money.
The cost of the plant for West Virginians is a cool $1.102B. This amount represents real cash that will be exchanged between FirstEnergy subsidiaries Mon Power and AE Supply, one of the company's unregulated generation subsidiaries. Of that $1.102B in cold, hard cash, 45%, or $529M, will come from an equity capital investment in Mon Power from parent company FirstEnergy. In exchange for their investment, FE will earn 10.5% return on the money. The other 55%, $573M, will be borrowed at a rate of approximately 5% over a 35 year term. According to the testimony of Steven Staub submitted as part of the company's filing with the WV Public Service Commission:
"Power plants are capital intensive assets with long useful lives. The tenor of a debt financing associated with a power plant should complement the useful life of
the asset. The financing plan is expected to include new notes that will mature no more than thirty-five years from their dates of issuance. Based on a review of
treasury yields and corporate credit spreads for comparably rated issuers over the past year, the newly issued long term debt would be expected to be issued with a coupon of approximately 5%. Rates will fluctuate in the future; thus, the actual cost of debt for the Transaction will be determined when the new long term debt is issued."
So, Mon Power and Potomac Edison customers will repay $1.102 BILLION to both parent company FirstEnergy and Mon Power's creditors at an approximate average interest rate of 7.75% for the next 35 years. In the video, Byron states that the cost to the "average residential consumer" will be about $90 per year.
That's $90 of cold, hard cash out of your pocket and into FirstEnergy's every year for the next 35 years, for a total of $3,150 per household. That's real debt, real money.
Just say no to FirstEnergy's "corporate hocus-pocus" and tell the WV PSC that you do not support FirstEnergy's proposal and do not wish to pay higher rates to subsidize an out of state corporation's financial success by purchasing their unwanted, cast-off, uncompetitive coal plant liability.
Click here to submit your comment to the PSC online. The case number is 12-1571-E-PC.