West Virginia Citizens Action Group, the only party to refuse to sign FirstEnergy's Harrison settlement, filed an Objection to the settlement with the PSC this afternoon. The Objection asks that the Commission "...disapprove the proposed settlement and that the Companies’ petition be denied in its entirety."
WVCAG is the only party that didn't cave in and go along with that sugarcoated flashing blue light special settlement the others were pressured into signing.
What? Pressured? That's what I think. Some people accuse me of having too much imagination, but if you pick up a crayon and start connecting the dots, a perplexing picture begins to form.
The public has been increasingly dissatisfied with the actions of the WV PSC over the past several years. It's not just some obscure agency nobody has ever heard of anymore. High profile rate cases, the PATH project, and now the intra-company coal plant sale cases have promoted the WV PSC to common dinner table talk. As well, public anger over the FirstEnergy/Potomac Edison billing investigation has raised the ire of legislators. The WV PSC, with one expired Commissioner and another re-appointed but not yet confirmed by the Senate, does not want any nasty utility public relations poo stuck to its shoe. Any decision it would have made on FirstEnergy's Harrison transfer (other than a denial) would have produced more citizen and legislative scorn, possibly turning into the straw that broke the camel's back. So, the Commission slunk out of the emergency exit by not having to make a real decision. Because the case was "settled," blame for what went wrong can be foisted off on the settling parties.
The Consumer Advocate will be retiring at the end of next month. A new one will be appointed by the Chairman of the PSC (let's not even worry about what a very stupid idea this is right now!) Any consumer advocate division employees who may be hopeful of moving up to the top spot and filling the vacancy would be beholden to pleasing the Chairman right now. Perhaps one way to cement the Chairman's approval would be a willingness to divert public anger from the Chairman (who doesn't need anymore public disapproval before his re-appointment is confirmed).
Once the PSC staff and Consumer Advocate rolled over for FirstEnergy, the rest of the parties just went on a feeding frenzy to pick up what stray crumbs they could (with the exception of WVCAG, who exhibited good, old fashioned ethics).
Maybe I just think too much... or maybe I just know too much. Anyhow, that's my theory of why this happened.
But... here's something else to think about!
How did a proposal that FirstEnergy said would raise your electric rates 6% settle for a 1.5% decrease in your rates?
The settlement changed the amount of the $1.1B purchase price consumers will pay by requiring Mon Power to book a $300M+ impairment for a portion of the purchase price. The cost ratepayers will have to pay is $795M. An impairment is an amount that comes out of shareholder dividends, instead of out of your pocket.
In addition, the $25M credit for the included sale of Pleasants will be amortized over the first 16 months of new rates, which causes an artificial and temporary rate reduction that will expire at the end of 2014. Without this Magic Math, there would be no "decrease."
This resulted in a yearly surcharge (rate increase) of $113.4M.
However, this rate increase was offset by a $129.5M yearly credit that FirstEnergy will include in their projected rates through the end of 2014. This $129.5M is based on projections, not reality. At the end of 2014, this projection will be trued up with actual expenditures and the resulting shortfall will turn into a rate increase. From the look of FirstEnergy's unrealistic projections (cooked for the transaction proposal to show what FirstEnergy wanted them to show), it's going to be a BIG rate increase of a magnitude never before experienced.
The difference between $129.5M and 113.4M is only $16M. While $16M sounds like a lot of money, it's a very small margin for error at a company whose annual coal costs are estimated at well over $500M and whose annual revenue from off-system sales of Harrison's excess electricity are nearly $300M. If FirstEnergy's calculations are off just $16M, then your rate decrease completely disappears. If they're off by more than $16M, the rate increase starts.
In addition, as the proud new owner of a creaking, old coal plant, you're now fully responsible for the expected $244M cost of retrofits to comply with EPA rules. FirstEnergy opted to close other coal plants rather than spend their own money to retrofit, but in this case, they're spending YOUR money. This $244M cost will also translate to more rate increases.
So, enjoy your temporary "rate decrease," because the rate increase you're going to receive on January 1, 2015 is going to be a shocker. But, Chairman Albert hopes his re-appointment will be safely in the bag by that time and that you all will have forgotten all about this crappy deal he handed you.
WVCAG is the only party that didn't cave in and go along with that sugarcoated flashing blue light special settlement the others were pressured into signing.
What? Pressured? That's what I think. Some people accuse me of having too much imagination, but if you pick up a crayon and start connecting the dots, a perplexing picture begins to form.
The public has been increasingly dissatisfied with the actions of the WV PSC over the past several years. It's not just some obscure agency nobody has ever heard of anymore. High profile rate cases, the PATH project, and now the intra-company coal plant sale cases have promoted the WV PSC to common dinner table talk. As well, public anger over the FirstEnergy/Potomac Edison billing investigation has raised the ire of legislators. The WV PSC, with one expired Commissioner and another re-appointed but not yet confirmed by the Senate, does not want any nasty utility public relations poo stuck to its shoe. Any decision it would have made on FirstEnergy's Harrison transfer (other than a denial) would have produced more citizen and legislative scorn, possibly turning into the straw that broke the camel's back. So, the Commission slunk out of the emergency exit by not having to make a real decision. Because the case was "settled," blame for what went wrong can be foisted off on the settling parties.
The Consumer Advocate will be retiring at the end of next month. A new one will be appointed by the Chairman of the PSC (let's not even worry about what a very stupid idea this is right now!) Any consumer advocate division employees who may be hopeful of moving up to the top spot and filling the vacancy would be beholden to pleasing the Chairman right now. Perhaps one way to cement the Chairman's approval would be a willingness to divert public anger from the Chairman (who doesn't need anymore public disapproval before his re-appointment is confirmed).
Once the PSC staff and Consumer Advocate rolled over for FirstEnergy, the rest of the parties just went on a feeding frenzy to pick up what stray crumbs they could (with the exception of WVCAG, who exhibited good, old fashioned ethics).
Maybe I just think too much... or maybe I just know too much. Anyhow, that's my theory of why this happened.
But... here's something else to think about!
How did a proposal that FirstEnergy said would raise your electric rates 6% settle for a 1.5% decrease in your rates?
The settlement changed the amount of the $1.1B purchase price consumers will pay by requiring Mon Power to book a $300M+ impairment for a portion of the purchase price. The cost ratepayers will have to pay is $795M. An impairment is an amount that comes out of shareholder dividends, instead of out of your pocket.
In addition, the $25M credit for the included sale of Pleasants will be amortized over the first 16 months of new rates, which causes an artificial and temporary rate reduction that will expire at the end of 2014. Without this Magic Math, there would be no "decrease."
This resulted in a yearly surcharge (rate increase) of $113.4M.
However, this rate increase was offset by a $129.5M yearly credit that FirstEnergy will include in their projected rates through the end of 2014. This $129.5M is based on projections, not reality. At the end of 2014, this projection will be trued up with actual expenditures and the resulting shortfall will turn into a rate increase. From the look of FirstEnergy's unrealistic projections (cooked for the transaction proposal to show what FirstEnergy wanted them to show), it's going to be a BIG rate increase of a magnitude never before experienced.
The difference between $129.5M and 113.4M is only $16M. While $16M sounds like a lot of money, it's a very small margin for error at a company whose annual coal costs are estimated at well over $500M and whose annual revenue from off-system sales of Harrison's excess electricity are nearly $300M. If FirstEnergy's calculations are off just $16M, then your rate decrease completely disappears. If they're off by more than $16M, the rate increase starts.
In addition, as the proud new owner of a creaking, old coal plant, you're now fully responsible for the expected $244M cost of retrofits to comply with EPA rules. FirstEnergy opted to close other coal plants rather than spend their own money to retrofit, but in this case, they're spending YOUR money. This $244M cost will also translate to more rate increases.
So, enjoy your temporary "rate decrease," because the rate increase you're going to receive on January 1, 2015 is going to be a shocker. But, Chairman Albert hopes his re-appointment will be safely in the bag by that time and that you all will have forgotten all about this crappy deal he handed you.
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