WV PSC testimony: Pleasants Plant deal could cost ratepayers $470 million
A proposed deal for FirstEnergy subsidiaries to acquire a coal-fired power plant would likely cost customers $470 million over the next 15 years, according to testimony from an energy and environmental consultant filed with the state Public Service Commission Friday.
David Schlissel, president of Schlissel Technical Consulting, submitted his prepared testimony on behalf of groups against the acquisition. He said Mon Power and Potomac Edison’s proposed Pleasants Power Station purchase from FirstEnergy should be rejected by the PSC because customers would be saddled with higher utility bills.
According to Schlissel, revenues earned from selling electricity generated by the Pleasants County plant wouldn’t be enough to cover the costs of maintaining it. The $470 million figure Schlissel reached is based on an economic analysis of energy market prices, Pleasants’ generation for the past year and generating capacity price estimates, he said in the filing.
“There is a high risk that the plant will not be profitable and will not produce a net benefit to ratepayers,” Schlissel said. “In fact, if there was not such a high risk, AE Supply and FirstEnergy would not be looking to offload the Pleasants plant to begin with.”
The groups Schlissel provided testimony for, WV SUN and West Virginia Citizen Action Group, have argued the $195 million deal would raise customer utility bills to benefit company shareholders and is similar to Mon Power’s Harrison power plant purchase, which an IEEFA report said cost customers more than $160 million.
If the purchase is approved by both the PSC and the Federal Energy Regulatory Commission, the plant would exit a competitive market and become a part of West Virginia’s regulated market, where it is guaranteed a profit.
FirstEnergy has made it clear it wants to exit the competitive energy services part of its operation, with CEO Charles Jones telling investors in earnings calls in 2016 that the company would either shut down coal plants or sell them so they are placed in regulated markets.
The companies have maintained in filings that the deal is expected to produce a 1.6 percent net decrease in rates, adding that acquiring the plant will prevent future capacity shortfalls the company projects will occur without adding additional power.
West Virginians for Energy Freedom, a group formed specifically to oppose the deal, said in a news release it delivered nearly 1,000 petitions to the PSC’s Charleston office asking for the commission to reject the deal.
“West Virginians are counting on you to do the right thing,” says West Virginians for Energy Freedom’s petition. “Please don’t put Mon Power and Potomac Edison customers on the hook for bailing out FirstEnergy’s shareholders.”
Supporters of the move say the plant’s economic benefits are crucial to the area it resides in and that a deal is necessary to prevent the plant from closing.
“While customers are expected to realize the transactions market hedging benefits, the state and surrounding communities should also gain the security of knowing that Pleasants is a reliable utility asset and a proven contributor to the economy and well-being of West Virginia for years to come,” Mon Power and Potomac Edison said in a March PSC filing.
Jody Murphy, director of the Pleasants Area Chamber of Commerce, said in a letter of support of the deal that the plant “pays millions in annual property and business taxes to fund local and state government and schools,” adding that the plant employs roughly 200 people.
“FirstEnergy…has stated repeatedly it will be leaving the competitive generation business sometime next year,” Murphy said in the letter. “That said, Pleasants County’s plant stands a good chance of being deactivated without the sale to Mon Power.”