Throughout the Harrison case at the WV PSC, experts for WV Citizen Action Group argued that it made no sense to saddle Mon Power/Potomac Edison rate payers with the cost of the coal-fired Harrison plant, because it would be much cheaper for the foreseeable future to simply buy cheaper gas-fired power from PJM’s wholesale markets. FirstEnergy argued throughout the case that wholesale prices were set to rise and Harrison would be the cheaper option. The Sierra Club, the so-called Consumer Advocate, and the PSC staff all bought this line and settled on FirstEnergy’s terms. Two PSC Commissioners approved that settlement.
Keryn has an interesting account of yesterday’s quarterly investment call conducted by FirstEnergy CEO Tony Alexander and a smattering of NEOs.
It turns out that Tony Alexander agrees with WV CAG:
As you know, our competitive operations have been challenged. Not by operational performance, but by capacity and energy markets that do not support investment in, or in some instances, the operation of generating units. While we can debate the reasons this is occurring, the fact is, power prices have been weak for the last couple of quarters and we may be facing continued soft power prices for at least the next several years.
As a result, we began to reposition our competitive business in 2012 and now through a series of even more aggressive actions have better positioned this business for the future.
For example, we have reduced the size and mix of the fleet by closing and selling competitive units. Last month, we closed the Hatfield and Mitchell power plants and we expect to complete the sale of certain hydro assets later this year.
In addition, we completed the Harrison and Pleasants transfer this quarter.
So, despite FirstEnergy’s claims that Harrison was all about saving WV rate payers money, it wasn’t. It was about dumping “competitive units” that weren’t competitive any more to shore up FirstEnergy’s sagging financial situation. Mr. Alexander says that the company figured all along that wholesale prices would stay down, and WV rate payers would be stuck with an expensive white elephant.
The joke’s on you, West Virginia PSC. At least Commissioner Palmer didn’t buy the BS FirstEnergy has spread around in Charleston for the last year.