Guess what Potomac Edison and Mon Power customers? New parent company FirstEnergy wants to raise your electric rates again effective January 1, 2013! That's right, those sky high bills you've been receiving because Potomac Edison and Mon Power are saving their money by not reading your electric meter are now going to be even more unreasonable!
According to a recent rate filing the companies made at the West Virginia Public Service Commission, your electric rates would actually decrease in 2013 due to lower power prices and the satisfaction of your old debt to the power companies. However, FirstEnergy is proposing that the PSC leave rates at current levels to begin paying for one of their coal plants that they wish to sell to Mon Power, who supplies all Potomac Edison's electricity.
But leaving rates at current high levels is only the tip of the iceberg. The price of the Harrison coal-fired generation plant that FirstEnergy's unregulated generation subsidiary wants to sell to their regulated WV subsidiary, Mon Power, is a cool $1.16 Billion. Purchasing this plant will make Potomac Edison and Mon Power rates increase if the transaction is approved.
Other options to purchasing this plant do exist and include purchasing currently low-priced power from PJM's electricity market, building a new gas-fired generation plant, decreasing demand through spending on energy efficiency and demand management programs which reduces the need to acquire new generation. However, FirstEnergy refuses to put out a request for proposals to supply needed generation through a bidding process. FirstEnergy has done their own skewed evaluation that they claim shows purchasing this coal plant is the cheapest option. It's hardly an unbiased and arm's length evaluation since parent company FirstEnergy stands make a substantial financial benefit from the transaction.
FirstEnergy is selling West Virginians a pig in a poke. The plant is currently owned by FirstEnergy's unregulated generation subsidiary. This means that the plant and its operating cost is paid for by the company in a competitive market. In West Virginia's regulated, uncompetitive environment, the plant and its operating cost will be paid for by Mon Power and Potomac Edison customers. FirstEnergy is shedding an expensive, uncompetitive liability into a regulated market where they are guaranteed full cost recovery plus a return, whether the asset is competitive or not. If this plant was still competitive, FirstEnergy's unregulated generation subsidiary would keep it as a money maker, but because it's not, they want to unload it on you and abscond with over a billion dollars, which you'll be paying off for years to come.
In addition, this plant needs several environmental upgrades to comply with EPA regulations. You'll pay for that too in the future, because it will be your plant by then and therefore your financial responsibility.
When FirstEnergy merged with Allegheny Energy in February of 2011, the Harrison plant had to be revalued at market value to please federal regulators. This added $589M to the book value of the plant. Now, less than 2 years later, FirstEnergy wants to sell the plant to you at full merger book value. If you had bought the plant before the merger, it would have cost you that much less. FirstEnergy's "merger synergies" have made this transaction even more expensive for Potomac Edison and Mon Power customers.
There's lots more detail to be found in the State Journal's news coverage:
FirstEnergy: Keep rates the same, use extra to buy coal plants
FirstEnergy wants to transfer coal-fired generation to Mon Power
How much is FirstEnergy's Harrison power station worth?
So, what can you do about it? 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 at twice the pre-merger price.
Click here to submit your comment to the PSC online. The case number is 12-1571-E-PC.
According to a recent rate filing the companies made at the West Virginia Public Service Commission, your electric rates would actually decrease in 2013 due to lower power prices and the satisfaction of your old debt to the power companies. However, FirstEnergy is proposing that the PSC leave rates at current levels to begin paying for one of their coal plants that they wish to sell to Mon Power, who supplies all Potomac Edison's electricity.
But leaving rates at current high levels is only the tip of the iceberg. The price of the Harrison coal-fired generation plant that FirstEnergy's unregulated generation subsidiary wants to sell to their regulated WV subsidiary, Mon Power, is a cool $1.16 Billion. Purchasing this plant will make Potomac Edison and Mon Power rates increase if the transaction is approved.
Other options to purchasing this plant do exist and include purchasing currently low-priced power from PJM's electricity market, building a new gas-fired generation plant, decreasing demand through spending on energy efficiency and demand management programs which reduces the need to acquire new generation. However, FirstEnergy refuses to put out a request for proposals to supply needed generation through a bidding process. FirstEnergy has done their own skewed evaluation that they claim shows purchasing this coal plant is the cheapest option. It's hardly an unbiased and arm's length evaluation since parent company FirstEnergy stands make a substantial financial benefit from the transaction.
FirstEnergy is selling West Virginians a pig in a poke. The plant is currently owned by FirstEnergy's unregulated generation subsidiary. This means that the plant and its operating cost is paid for by the company in a competitive market. In West Virginia's regulated, uncompetitive environment, the plant and its operating cost will be paid for by Mon Power and Potomac Edison customers. FirstEnergy is shedding an expensive, uncompetitive liability into a regulated market where they are guaranteed full cost recovery plus a return, whether the asset is competitive or not. If this plant was still competitive, FirstEnergy's unregulated generation subsidiary would keep it as a money maker, but because it's not, they want to unload it on you and abscond with over a billion dollars, which you'll be paying off for years to come.
In addition, this plant needs several environmental upgrades to comply with EPA regulations. You'll pay for that too in the future, because it will be your plant by then and therefore your financial responsibility.
When FirstEnergy merged with Allegheny Energy in February of 2011, the Harrison plant had to be revalued at market value to please federal regulators. This added $589M to the book value of the plant. Now, less than 2 years later, FirstEnergy wants to sell the plant to you at full merger book value. If you had bought the plant before the merger, it would have cost you that much less. FirstEnergy's "merger synergies" have made this transaction even more expensive for Potomac Edison and Mon Power customers.
There's lots more detail to be found in the State Journal's news coverage:
FirstEnergy: Keep rates the same, use extra to buy coal plants
FirstEnergy wants to transfer coal-fired generation to Mon Power
How much is FirstEnergy's Harrison power station worth?
So, what can you do about it? 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 at twice the pre-merger price.
Click here to submit your comment to the PSC online. The case number is 12-1571-E-PC.
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