Smaller Ohio utility also seeking ‘bailout’ from state regulators
FirstEnergy is not the only Ohio utility pushing for additional revenue from state regulators.
Dayton Power and Light is requesting a $145 million annual rider that would allow the Ohio electric utility to maintain its financial integrity, a claim derided by opponents as detrimental to customers who should not have to pay for the company’s past bad energy bets.
Utilities asking state government for subsidies at consumers’ expense is contrary to state law favoring competitive markets, said Trent Dougherty, general counsel with the Ohio Environmental Council (OEC). The DP&L move also stands as a “bailout” for the company’s faulty investment in struggling coal plants, he noted.
“We don’t dispute that DP&L is on the brink of serious financial issues, but we question customers having to bear the brunt of $145 million per year,” said Dougherty. “You’re opening a Pandora’s box for utilities going to consumers to get funding.”
Ohio law states that a competitive wholesale generation firm is “fully on its own” in the wholesale market following the transition period to a deregulated electricity market, a point which the Dayton company has already passed, said Noah Dormady, an Ohio State University professor who studies energy markets. Any money that flows from ratepayers to a wholesale generation firm would be a “transition cost,” a situation that no longer applies for DP&L.
“You’ve got people trying to pay their heating bills, with energy executives asking them for subsidies,” said Dormady. “It’s not fair to either households or businesses struggling to make payroll.”
Looking for approval
In an October 11 amendment application to the Public Utilities Commission of Ohio, DP&L requested a seven-year distribution modernization rider (DMR) amounting to $1 billion. The rider would be charged over the period of the utility’s previously proposed electric security plan (ESP), with a term from Jan. 1, 2017 to Dec. 31, 2023. The 22-page amendment request stated both the company and its holding entity, DPL Inc., face “significant threats” to their financial integrity, including a falling credit rating, “anemic growth load” and “historically low market prices.”
Should the amendment become law, the PUCO could change electric rates if the company’s financial health is at stake. In testimony included with the application, utility analysts said a typical residential customer using 1,000 kilowatt-hours per month can expect their bills to drop 87 cents monthly during 2017.
“If the DMR is approved as proposed, it will assist DP&L to maintain investment grade credit ratings which will facilitate investments in transmission and distribution infrastructure modernization,” the utility said in an email.
A prehearing conference in the case is scheduled for January 5, with an evidentiary hearing tabbed for January 11.
DP&L’s tack to provide what it deems “reliable, safe and stable customer service” is similar to one taken by Akron energy provider FirstEnergy, Ohio-based observers say. In October, the PUCO agreed to a three-year, $132.5 million annual DMR for FirstEnergy, a charge set to provide the utility with a funding infusion “so that it will be financially healthy enough to make future investments in grid modernization,” as reported in a PUCO press release on the decision.
DP&L’s new rider follows Federal Energy Regulatory Commission rulings from earlier this year blocking power purchase agreements to support aging coal and nuclear plants owned by FirstEnergy and AEP Ohio. While those agreements were initially approved by the PUCO, the agency said that providers with “captive customers” could not buy wholesale electricity from affiliated generators without a review under the Federal Power Act.
New bill riders from FirstEnergy, AEP and most recently DP&L attempt to circumvent the FERC decision and siphon ratepayer funds back to shareholders while ignoring calls to invest in cleaner energy options, Dougherty of OEC said.
“DP&L’s rider is the same as the other utilities, perhaps with even more emphasis on paying off uneconomic coal plants,” he said. “In no other business would a company say they’re having credit issues, then have their customers bail them out of it.”
Electric security plans establish pricing and supply of generation service, and may include distribution system investments, grid modernization, job retention initiatives and energy efficiency measures.
As part of DP&L’s security plan filing with the PUCO, the company is considering closure of two coal-fired power plants near the Ohio River in the southern end of the state. The J.M. Stuart and Killen facilities, both located in Adams County, are older stations operating at a time when coal has become increasingly uncompetitive with natural gas and renewable energy.