Challenges on Several Fronts to Ohio Utility Bailouts

first_imgChallenges on Several Fronts to Ohio Utility Bailouts FacebookTwitterLinkedInEmailPrint分享Kathiann M. Kowalski for Midwest Energy News:Despite unanimous approval by Ohio regulators last week, opponents of income guarantees for two utilities’ power plants still have multiple avenues to challenge the plans.The deals, involving certain coal plants and a nuclear plant owned by FirstEnergy and American Electric Power (AEP),  are expected to trigger requests for rehearing and court appeals.Also, litigation by the utility affiliates’ competitors is proceeding before the Federal Energy Regulatory Commission (FERC). Others challengers are involved in those cases too.Both AEP and FirstEnergy have argued that the power purchase agreements are necessary and will save consumers money in the long term.Critics call the deals “bailouts” to prop up uncompetitive power plants and say they will cost Ohioans billions of dollars over the next eight years. They also argue that the plans interfere with customer choice and competition in the generation market.The Electric Power Supply Association, Dynegy and other organizations and companies already have cases underway at FERC that aim to have federal regulators review and prevent the AEP and FirstEnergy power purchase agreements from taking effect.Challengers also have a potential argument under Ohio’s law mandating competition in the electricity generation market. Under that law, passed in 1999, a distribution utility generally cannot favor its own affiliates.As a general rule, most cases involving long-term power purchase agreements for electricity use them to lock in a price for the energy’s end users.Under AEP and FirstEnergy’s plans, however, electricity purchased from their unregulated generation affiliates will not go directly to their utilities’ non-shopping customers. Instead, both FirstEnergy and AEP have said that they intend to resell the electricity into the wholesale market for the grid managed by PJM.The Office of the Ohio Consumers’ Counsel (OCC), various local governments and others have moved to intervene in one or more of the FERC cases.Approval of the deals “could distort market clearing prices, resulting in unjust and unreasonable rates in PJM’s markets,” said OCC in one of its briefs.Another argument will likely focus on the magnitude of customers’ potential losses.Challengers also have a potential argument under Ohio’s law mandating competition in the electricity generation market. Under that law, passed in 1999, a distribution utility generally cannot favor its own affiliates.“These affiliate agreements that insulate the shareholders of the parent corporation from any risk blur the lines of corporate separation — which is the cornerstone protection of Ohio’s customer-choice centered energy policy,” said Dougherty.“In a certain sense, it’s ironic in that a lot of the rhetoric around ‘freezing’ [Ohio’s] renewable energy and energy efficiency standards was based on not wanting the government to mandate certain technologies, whereas the PUCO ruling is locking customers into uneconomic coal plants,” said Cathy Kunkel, an analyst for the Institute for Energy Economics and Financial Analysis.“But, in reality” Kunkel continued, “both the recent PUCO ruling and the freezing of the standards were part of the same strategy on the part of Ohio’s main utilities, particularly FirstEnergy, to reduce competition to their own generation.”Full article: ‘This isn’t over’: Opponents still fighting Ohio ‘bailout’ planslast_img

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