This Ohio utility has an innovative plan to save coal power: force customers to buy it
A power utility in Ohio is attempting to shaft its own customers in a manner so shameless as to defy description. Yet describe it we must, for it represents everything backwards and perverse in the electricity sector and reveals that the interests of the institutions that provide electricity have come fundamentally out of sync with the interests of the citizens that depend on it.
Plus it’s pretty funny, in a morbid sort of way. You almost have to admire the chutzpah. But to understand it takes a little explaining. Here’s the TL;DR version:
FirstEnergy, a power company that serves 6 million customers in Ohio, Pennsylvania, West Virginia, Virginia, Maryland, New Jersey, and New York, owns a handful of big nuclear and coal power plants that are no longer competitive in power markets. Rather than shut the plants down, the company is asking Ohio regulators to force customers to buy the plants’ power for the next 15 years, an enormous subsidy that would ensure FirstEnergy shareholders a steady, predictable profit even as its ratepayers get hosed.
FirstEnergy supported markets until markets got competitive
A quick bit of background.
Let’s recall that US power utilities come in two basic flavors. Most Americans are still served by vertically integrated utilities, meaning utilities that own the entire electricity supply chain, from power plants to transmission lines to transformers to local distribution lines. They generate the power, transport it, and deliver it to customers. This is the traditional regulated-monopoly utility model, which has been around for over a century.
In the 1990s and early 2000s, there was a wave of “deregulation,” whereby power distribution utilities — the ones that send you your bill and repair your power lines — were split off from power generation utilities. The idea was that the latter would compete in open wholesale power markets, while the former would buy the cheapest power available on those markets.
Deregulation stampeded through about 15 states (Ohio among them) and then, after the California Enronpocalypse of 2000, froze, where it remains more or less the same to this day. Here’s the state of play as of 2012: