The WV Citizen Action Group filed its appeal of the PSC’s Harrison decision at the WV Supreme Court today.
And here is WV CAG’s press release on the appeal petition:
WV Citizen Action Appeals Harrison Power Plant Purchase to WV Supreme Court
Charleston, W.Va. – West Virginia Citizen Action Group (WV-CAG) filed an appeal at the West Virginia Supreme Court of Appeals today asking that the Public Service Commission’s October 7 order approving FirstEnergy subsidiary Mon Power’s purchase of the Harrison power plant be vacated in its entirety, because the approval of a quarter billion dollar markup in the price of the plant violated state law and the PSC’s own past orders. WV-CAG argued that the need for additional generation capacity was in fact a cover for FirstEnergy’s objective of getting access to the $1.1 billion cash in Mon Power’s checking account to reduce FirstEnergy’s own excessive debt, which has been the subject of ongoing critical comment by the financial community.
The Harrison plant is being sold to Mon Power by FirstEnergy’s deregulated subsidiary, Allegheny Energy Supply. Under AES’s ownership, the Harrison plant must compete with other power plants on the wholesale power market to make money; by transferring the plant to regulated Mon Power, FirstEnergy has ensured that the plant’s costs are guaranteed to be recovered from West Virginia ratepayers. In yesterday’s 3rd quarter 2013 earnings call, FirstEnergy CEO Anthony Alexander confirmed WV-CAG’s basic points: that transfer of the Harrison plant to Mon Power was designed to reduce FirstEnergy’s excessive debt burden and to move an uncompetitive coal plant into a regulated environment.
WV-CAG argued that the $257 million “acquisition premium” built into the price of Harrison was patently illegal. WV-CAG noted in its filing that including this “acquisition premium” in rates is contrary to a fundamental principle of utility ratemaking and decades of precedent from public service commissions around the country, including the West Virginia PSC.
WV-CAG also noted that the claim of “arms length” negotiations between Mon Power and its affiliated company AES was not supported by any evidence.
“FirstEnergy is the clear winner in this deal,” said W-VCAG Executive Director Gary Zuckett. “The illegal markup that FirstEnergy has tacked onto the price of Harrison equates to $500 from every Mon Power and Potomac Edison customer in West Virginia.”
WVCAG’s appeal is available online at www.eewv.org.
Background: In Case No. 12-1571 before the West Virginia Public Service Commission, Mon Power and Potomac Edison proposed to purchase 80% of the Harrison Power Plant from Allegheny Energy Supply, and to sell a small share (100 MW) of the Pleasants Power Plant to Allegheny Energy Supply at a net cost to ratepayers of $1.1 billion. Mon Power, Potomac Edison, and Allegheny Energy Supply are all subsidiaries of Ohio-based FirstEnergy Corporation. In a proposed settlement filed with the Commission on August 21st, the parties to the case (excluding WVCAG) agreed to a settlement that would reduce the price to about $800 million. The Commission adopted this settlement in a final order, issued October 7th, with Commissioner Ryan Palmer dissenting from the majority opinion.