Sierra Club Explains Its Harrison Settlement

Here is a link to the WV Sierra Club’s Nov/Dec newsletter.  The first story in the newsletter is a story by Jim Kotcon explaining the chapter’s support of FirstEnergy’s settlement in the Harrison power plant case.

This article is much more like the story I wished I had seen from the WV chapter earlier.  This account actually mentions that the settlement allowed the transfer of the Harrison Power Station to Mon Power.  There is still no explanation what a bad deal this transfer is for FirstEnergy’s WV rate payers, and how the deal puts WV customers on the hook for even more coal-fired electricity.

Nonetheless, I will give Mr. Kotcon his due for providing a credible summary of the settlement.  I have to forgive him for spinning a lot of the details to justify the Sierra Club’s participation in the settlement.  His account still overstates the claimed benefits of the deal where energy efficiency and renewable power are concerned.  In some cases, his assertions are very misleading.

Throughout the case, the WV Consumer Advocate and the WV Citizens Action Group pushed for the PSC to require FirstEnergy to (1) discover the least expensive option for meeting their capacity need by issuing a request for proposals (RFPs) to solicit competitive bids and (2) to turn over FirstEnergy’s energy efficiency programs to a specialized efficiency management firm through an RFP process.

In his article, Mr. Kotcon appears to claim that the Sierra Club achieved these goals when he states:

In addition, the settlement requires First Energy to issue a “Request For Proposals” and include energy efficiency as a resource to be considered. The PSC had serious reservations about requiring an RFP process, even though energy efficiency is cheaper, faster, safer and cleaner than new generation sources, and creates many more local jobs than new generation.

But, of course, we know that “energy efficiency as a resource” will not “be considered,” because the Sierra Club has already closed the door to any equal consideration by agreeing to allow the transfer of the Harrison plant to Mon Power.  The deal the Sierra Club agreed to will provide more than enough capacity to meet Mon Power’s needs for the next 20 years, without any significant contribution from energy efficiency.

Now, let’s look at the actual wording of the settlement that the Sierra Club signed onto concerning a “requirement” for an RFP.  This quote is taken from page 60 (.pdf numbering) of the PSC’s final order.

The Companies agree to utilize a Request for Proposal (“RFP”) when implementing their energy efficiency programs. Such RFP may be for any aspect of the Phase II Energy Efficiency Portfolio Plan. The Companies will share the results with the Parties and Commission; provided, however, the Companies shall not be bound by the RFP results.

So there will be no RFP for the entire FirstEnergy energy efficiency program, only for “any aspect of the Phase II Energy Efficiency Portfolio Plan.”  In other words, FirstEnergy might decide to use an RFP process for a part of the Plan (and only Phase II created in the settlement), or it might not.  “Any aspect” could also mean “no aspect.” But FirstEnergy really pulls the rug out from under the whole shebang when they state “the Companies shall not be bound by the RFP results.”

Remember that Mon Power and Potomac Edison rate payers will be paying for all of FirstEnergy’s minimal energy efficiency programs.  The Sierra Club’s settlement “victory” could result in FirstEnergy going through the whole charade of an RFP process for “any aspect” of their program only to say, sorry we aren’t bound by any of this, we’ll do what we want.

This is hardly the victory Mr. Kotcon claims it will be.  And we will all pay for it, on top of the outrageous price we will all be paying for the plant itself.

I was actually pretty offended by Mr. Kotcon’s to give Energy Efficient WV and WV Citizens Action Group credit for forcing FirstEnergy to start energy efficiency programs in our state three years ago.  Here is Mr. Kotcon’s assessment:

Meanwhile, First Energy must develop a plan to expand energy efficiency offerings in West Virginia. The PSC has required a stakeholder input process, and the Sierra Club will be asking for your help to get even more energy efficiency mandates approved in that process.

This statement gives the impression that FirstEnergy’s energy efficiency programs came about as the result of the Sierra Club’s efforts in the Harrison case.  That is simply false, or, at best, misleading.

Finally, we have this summary of the case:

For the first time, commissioners are questioning whether exclusive reliance on dirty energy sources is appropriate, even in West Virginia.

In fact, the Commissioners who wrote the majority supported final order did no such thing.  They went through desperate contortions to eliminate energy efficiency from the Harrison equation and wholeheartedly supported coal-fired electricity in WV.

Here’s what the Commission said in the Statement of Facts section of its final order about coal-fired power:

21. Harrison is a good and valuable asset. Harrison (i) has relatively low operating costs and is equipped with an array of pollution control equipment, (ii) is in the middle of a major coal producing area, (iii) has many remaining years of valuable life,

22. The levelized cost of Harrison was the lowest cost alternative when compared to the cost of long-term investment and operating cost of new coal-fired generation, new nuclear generation, and new gas-fired generation.  The benefits of Harrison are further enhanced by the lower levelized cost of the Transaction pursuant to the reduced rate base in the Joint Stipulation.

23. Beginning with the lower rate-base value of Harrison, the levelized cost of Harrison remains the lowest cost alternative, even when subject to reasonable variations in assumptions, including for example, a doubling of the assumed capacity factor for a combined-cycle gas plant to fifty percent, and inclusion of a reasonable expectation of a costs imposed on carbon emissions.

Commissioners McKinney and Albert stated clearly that Harrison was the lowest cost way to provide FirstEnergy’s electrical needs in WV.  Period.  There was no “questioning” involved.

As for the Commissioners seriously considering energy efficiency in this case:

The WVCAG argues that MPPE have not sought sufficient energy efficiency and demand response to offset its energy and capacity deficits. Further, WVCAG argues that the Joint Stipulation does not include “Necessary Energy Efficiency Provisions.” The Commission rejects this criticism of the Joint Stipulation. Energy efficiency and demand response are part of an ongoing program and are supported by MPPE.  Yet, the record is clear that energy efficiency and demand response can cover only the tip of the iceberg of MP/PE capacity and energy deficiency. [emphasis mine]

WVCAG was the only party in the case to object to the settlement.  The Sierra Club had already agreed to allow the sale of Harrison to proceed without any meaningful inclusion of energy efficiency in the deal.  The Commission’s opinion about the impact of efficiency is clear.  They didn’t take it seriously at all as a way of meeting FirstEnergy’s resource needs.

The Sierra Club’s new account of its settlement decision is welcome, but the WV Chapter is still spinning hard.  Too hard.

2 thoughts on “Sierra Club Explains Its Harrison Settlement

  1. I wonder how many Sierra Club members and others recruited to oppose the Harrison transaction feel used as set dressing in some other agenda Sierra Club has… like intervening in any and all state utility cases with the intent of gaining a few energy efficiency crumbs, but causing all sorts of additional costs and burden on ratepayers in the process? Sort of like green cockroaches? How much damage will Sierra Club do to public understanding and support of energy efficiency by lying to people about its effectiveness, like pretending that it would have been enough to totally obviate need for additional capacity in the Harrison case? How many unwitting citizens will Sierra Club set in motion on an impossible journey to create some meaningless buzz about “increased energy efficiency” that has no real concrete plan or goals?

    • I have repeatedly invited the WV Sierra Club to join the discussion, and perhaps answer some of your questions, in comments to my posts. So far, no takers.

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