WV PSC Orders Customers to Pay More to Fix FirstEnergy Merger Billing Disaster

Yesterday, the WV PSC issued its final order in the FirstEnergy billing case.  The order requires FirstEnergy to begin reading its customers’ meters monthly, instead of the current bimonthly schedule, beginning in July 2015.  The order gives FirstEnergy a whole year to make this transition.  The PSC also requires customers to pay for the estimated $5 million cost of the new employees that FirstEnergy will need to hire at its WV subsidiaries, Mon Power and Potomac Edison to meet this requirement.  Beyond some stern words and the continuation of monthly reporting, the Commissioners imposed no penalties for FirstEnergy’s disastrous performance, nor do the Commissioners establish any new penalties for FirstEnergy if the company fails to comply with the current order.

So, once again, the WV PSC has imposed the costs of the failed (from the standpoint of WV customers) FirstEnergy/Allegheny merger on WV customers.  The Commissioners spend much of their order defending their cowering before the Ohio electric monopoly.  The Commissioners rightly point out that the monopoly positions enjoyed by WV’s Ohio-based electric companies allow them to totally dominate the terms and conditions of the services they offer to West Virginians.  The PSC is the only agency put in place by the WV Legislature to control the rapacious intentions that tend to motivate monopolies in these situations.  But the PSC then goes on to say that it always ends up deferring to the management of utilities.  In other words, the PSC offers the same consolation that Gov. Tomblin offered WV American Water’s customers in the recent Freedom Spill – “you’re on your own, suckers” (a paraphrase).

Back in 2011, the WV PSC approved the purchase of Allegheny Energy by Ohio’s FirstEnergy.  FirstEnergy promised “synergies” and improved customer service and all things wonderful for WV.  The WV PSC approved the merger, despite a long history of FirstEnergy management disasters, including its Davis Bessie nuclear plant and the company’s role in starting the massive 2003 blackout from New York to Toronto.  The PSC imposed few requirements on FirstEnergy beyond some temporary staffing requirements and a ban on the company’s passing on the costs of the merger to WV customers.  At the time of the merger, the PSC had learned through at least two general investigations that Allegheny Energy had neglected for years the maintenance of its distribution system in WV.  The Commissioners imposed no new requirements on FirstEnergy to remedy this situation.

In the recent Harrison Power Station case, two Commissioners stripped away their earlier commitment to protect WV customers by allowing FirstEnergy to double the price of the Power Station that the PSC forced WV customers to “buy” in a sham “negotiation” among companies totally controlled by FirstEnergy managers in Akron.  Following its investigation into failures of WV’s electric utilities to withstand recent storms, the Commissioners allowed FirstEnergy and AEP to pass on the new costs of remedying the companies’ past neglect of system maintenance on to customers in the form of new rate increases.  FirstEnergy has just filed a base rate case for a 15% rate increase, largely to cover these distribution system maintenance costs.  And the new final order in the billing case will allow FirstEnergy to amend their base rate case filings to include the new cost of reading meters monthly, so they can get their new rate increase right away. (Thanks, Keryn.)

Now we see the Commissioners give FirstEnergy a get out of jail free card when it comes to jerking West Virginians around over electric metering and billing.

It is hard not to see the supine attitude of the WV PSC as collusion with FirstEnergy’s exploitation of its monopoly situation in WV.  It is now clear that all electrical utilities across the US are buying up companies in regulated states, because they have much more control of public utilities commissions than they have in the open electricity markets in deregulated states.  The WV PSC needs to wake up to the fact that they are just pawns in FirstEnergy’s multi-state monopoly game.

I would feel differently if the PSC had given West Virginians the tools to break free from the grip of electric utilities, but here too, the Commission (as well as the WV Legislature) fails to do its job.  WV has no incentives that allow West Virginians to produce their own electricity and be compensated fairly in the market.  WV has some of the worst utility energy efficiency programs in the US.  WV rate tariffs penalize WV businesses when they try to produce their own power.  WV law prevents local governments from using their eminent domain powers to establish publicly owned electric companies.

It is also clear that WV’s past low electric rates (but not electric bills) were not due to “cheap” coal power.  As recent cases and rate increases have amply demonstrated, neglect of maintenance and customer service, a neglect shared by WV regulators, has made a significant contribution to keeping WV electric rates artificially low in the past.  Now, after several crises that have forced regulators to react, rates will rise steadily, along with West Virginians’ electric bills.

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