Customers in the deregulated states of Illinois and Ohio are up in arms about FirstEnergy's plan to stick it to them with a $5 - $15 one-time charge to pay for what it says are "unexpected costs incurred during the polar vortex."
"FirstEnergy Solutions is preparing to bill about 2 million of its 2.7 million retail customers a surcharge for expenses the company will soon have to pay for reserve power it needed when temperatures plummeted below zero." 2,000,000 x $15 = $30M
That's $30M being transferred from consumers pockets into the pockets of FirstEnergy. A company spokeswoman opined, “We consider that pretty nominal.”
I wonder if she also considers CEO Tony Alexander's annual $23M compensation "nominal." If the big guy took a pay cut, it would almost cover the cost of the "polar vortex," wouldn't it?
Crain's described the reason for the charge like this:
"The company confirmed that it will impose a one-time charge of between $5 and $15 on customer bills in June to recover a portion of its power-purchasing costs made through PJM Interconnection LLC's regional grid, which serves 61 million people in all or part of 13 states from northern Illinois to the Mid-Atlantic, as well as Washington. In January, PJM — which acts as a market referee for power generators — lifted caps on the price natural gas-fired power plant operators could charge as the cost of gas soared due to record demand, and electricity consumption likewise spiked."
The Plain Dealer described the reason for the charge like this:
"When the arctic blast hit the region in early January, demand for electricity spiked - and simultaneously dozens of power plants failed because of the weather, mechanical problems or because of fuel problems.
About 20 percent of the PJM region's power plant capacity went down, he said, threatening the stability of grid. And because the cold was widespread and lasted many days, PJM grid operators found that they could not import power from other areas.
Wholesale power prices then skyrocketed. PJM reduced voltages by 5 percent, asked for voluntary conservation and even briefly considered rolling brownouts to avoid a grid collapse and blackout.
But PJM also ordered more expensive power plants to begin generating, just to keep the system stable, he said."
But here's another reason:
FERC compounded the problem by lifting a $1000 price cap and allowing these greedy corporate entities to further game PJM's malfunctioning markets. FERC has allowed generators to charge whatever they want, and is in denial about any "harm" that may result:
"FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a 'concrete problem,' would not harm third parties and would be limited in scope."
It's really not sounding very "limited in scope," is it?
In addition, FirstEnergy ended up purchasing so much expensive power because many of its generation plants were out of service. Where does FirstEnergy's fault in that end and the consumer's responsibility for the charges begin?
Not all electric companies are passing these "polar vortex" charges on to their customers, however. But, FirstEnergy is shuckin' and jivin' like a champ on a "special website" the company has set up to serve you some koolaid, as well as in the media:
"Francis of FirstEnergy Solutions declined to say how much her company has been billed by PJM, except to describe the amount as unprecedented. She said the company is passing on only a portion of the charge to customers."
FirstEnergy also said the company has no idea how much it will have to pay.
"Ms. Francis declined to say how much in unanticipated vortex-related costs FirstEnergy Solutions must pay, saying that figure was confidential. FirstEnergy will know next month precisely how much the surcharge will be, she said."
Yes, it seems that the real cost to FirstEnergy is going to remain a deep, dark secret, not even revealed to the company's investors.
That's because:
"We thought it was necessary to pass through these costs to customers where contracts allow,” FirstEnergy spokeswoman Diane Francis said."
Necessary? FirstEnergy thought using the fine print in its contracts to stick it to customers in deregulated states was so very funny during its last earnings call.
"FirstEnergy Solutions is preparing to bill about 2 million of its 2.7 million retail customers a surcharge for expenses the company will soon have to pay for reserve power it needed when temperatures plummeted below zero." 2,000,000 x $15 = $30M
That's $30M being transferred from consumers pockets into the pockets of FirstEnergy. A company spokeswoman opined, “We consider that pretty nominal.”
I wonder if she also considers CEO Tony Alexander's annual $23M compensation "nominal." If the big guy took a pay cut, it would almost cover the cost of the "polar vortex," wouldn't it?
Crain's described the reason for the charge like this:
"The company confirmed that it will impose a one-time charge of between $5 and $15 on customer bills in June to recover a portion of its power-purchasing costs made through PJM Interconnection LLC's regional grid, which serves 61 million people in all or part of 13 states from northern Illinois to the Mid-Atlantic, as well as Washington. In January, PJM — which acts as a market referee for power generators — lifted caps on the price natural gas-fired power plant operators could charge as the cost of gas soared due to record demand, and electricity consumption likewise spiked."
The Plain Dealer described the reason for the charge like this:
"When the arctic blast hit the region in early January, demand for electricity spiked - and simultaneously dozens of power plants failed because of the weather, mechanical problems or because of fuel problems.
About 20 percent of the PJM region's power plant capacity went down, he said, threatening the stability of grid. And because the cold was widespread and lasted many days, PJM grid operators found that they could not import power from other areas.
Wholesale power prices then skyrocketed. PJM reduced voltages by 5 percent, asked for voluntary conservation and even briefly considered rolling brownouts to avoid a grid collapse and blackout.
But PJM also ordered more expensive power plants to begin generating, just to keep the system stable, he said."
But here's another reason:
FERC compounded the problem by lifting a $1000 price cap and allowing these greedy corporate entities to further game PJM's malfunctioning markets. FERC has allowed generators to charge whatever they want, and is in denial about any "harm" that may result:
"FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a 'concrete problem,' would not harm third parties and would be limited in scope."
It's really not sounding very "limited in scope," is it?
In addition, FirstEnergy ended up purchasing so much expensive power because many of its generation plants were out of service. Where does FirstEnergy's fault in that end and the consumer's responsibility for the charges begin?
Not all electric companies are passing these "polar vortex" charges on to their customers, however. But, FirstEnergy is shuckin' and jivin' like a champ on a "special website" the company has set up to serve you some koolaid, as well as in the media:
"Francis of FirstEnergy Solutions declined to say how much her company has been billed by PJM, except to describe the amount as unprecedented. She said the company is passing on only a portion of the charge to customers."
FirstEnergy also said the company has no idea how much it will have to pay.
"Ms. Francis declined to say how much in unanticipated vortex-related costs FirstEnergy Solutions must pay, saying that figure was confidential. FirstEnergy will know next month precisely how much the surcharge will be, she said."
Yes, it seems that the real cost to FirstEnergy is going to remain a deep, dark secret, not even revealed to the company's investors.
That's because:
"We thought it was necessary to pass through these costs to customers where contracts allow,” FirstEnergy spokeswoman Diane Francis said."
Necessary? FirstEnergy thought using the fine print in its contracts to stick it to customers in deregulated states was so very funny during its last earnings call.
Steve Fleishman - Wolfe
Yeah. Hi, good afternoon.
Tony Alexander - President & CEO
Hi, Steve.
Steve Fleishman - Wolfe
Hi, Tony. I guess this question might be for Leila. I think you mention the PJM ancillary cost that some of those get pass through the customers?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
Yes.
Steve Fleishman - Wolfe
Is that just in certain states or how does that work? How do we know which areas get pass through or not?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is pursuant to contract in a specific language within the contract so it is not a state by state kind of thing, Steve.
Steve Fleishman - Wolfe
Okay. So it is certain types of your customer classes?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
In?
Steve Fleishman - Wolfe
In a retail business?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is not even the same throughout particular classes.
Steve Fleishman - Wolfe
Okay.
Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is as that contract language was developed for that particular customer or grouping of customer. So there is no way I can even give it to you by segment.
Steve Fleishman - Wolfe
Okay. So some of the cause when you get this data come up will be cause that you absorb but some of those would be available to essentially pass through your contracts to the customers?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
Correct.
Steve Fleishman - Wolfe
And in the future, do most of your contracts have that clause, so new ones do or not older ones or vice versa?
Leila Vespoli - EVP, Markets, and Chief Legal Officer
I think it would be safe to say that we are going to be adding that language where we can in the future.
Steve Fleishman - Wolfe
Got it. Okay. Thank you. Just want to clarify that.
Leila Vespoli - EVP, Markets, and Chief Legal Officer
Okay.
So, if you don't want to get stuck with these kind of charges in your deregulated electric bill again, do like the City of Rockford and look for a new supplier ASAP.
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