AEP & FirstEnergy Want Money for Nothing – Your Money

There have been some interesting developments with the two electricity holding companies that control WV’s electric system.  Here’s the story.

FirstEnergy has sued PJM in federal court to get all of the demand resources that cleared the recent PJM capacity auction thrown out.  And why is FirstEnergy doing this?

FirstEnergy filed its complaint on the same day PJM announced those auction results. Also on that same day, the District of Columbia Court of Appeals issued a decision dealing with demand response and FERC’s authority in the wholesale electricity market.

FirstEnergy’s complaint claims that the federal court of appeals decision should preclude PJM from accepting demand response resources in the capacity auction. The federal court case did not deal with the capacity market, and PJM was not a party to it.

“The continued use of demand response in capacity auctions is likely to prevent generation units owned by FirstEnergy to clear in PJM’s auctions, resulting in potentially millions of dollars in lost revenues,” says the complaint.

The complaint does not say whether any particular FirstEnergy resources failed to clear this year’s capacity auction.

Yes, you read that right.  FirstEnergy wants some of the best and lowest cost capacity resources in PJM thrown out.  Why?  Because it hurts FirstEnergy’s profits by keeping their higher cost coal burners and dodgy nukes from clearing in the PJM capacity market.  All of us rate payers in PJM pay that capacity cost.  FirstEnergy is suing so they can raise your rates.

The L’il Coal Fella says it all:

The day before PJM announced its results, however, company spokesperson Doug Colafella noted that the company has concerns about demand response resources.

Including them in the auction “certainly makes it more difficult for our more reliable assets, like nuclear plants [and] coal plants,” Colafella said. Those “iron-in-the-ground hard assets” have more fixed costs, such as employees, fuel costs, and so on.

“The whole point of a capacity auction is making sure that those facilities have their costs covered three years down the road so they can remain open,” he added.

Actually, the Coal Fella is wrong about “the whole point of a capacity auction.” The auction is about maintaining available capacity and reserve margins in PJM.  It is not designed to serve the needs of big generators’ shareholders by allowing obsolete generation to “remain open.”

AEP is trying another tack in OH.  The company has just applied to the OH PUC for a new charge to be put on its OH electric bills.

AEP’s action before the Public Utilities Commission of Ohio (PUCO) does not directly challenge the PJM auction results. Instead, the company wants customers to cover extra costs for some of the electricity it gets from coal-fired power plants.

The proposed Power Purchase Agreement Rider would apply initially to plants owned by the Ohio Valley Electric Corporation. AEP owns about 39 percent of the corporation’s shares. Other shareholders include utilities owned by FirstEnergy, Duke Energy, and Dayton Power and Light Company.

The rider would basically “be trying to prop up these old, financially-in-ruins power plants,” according to Dan Sawmiller of the Sierra Club’s Beyond Coal campaign.

Testimony in the case shows that AEP might later seek to expand the rider to cover purchases from other plants as well.

So much less subtle than FirstEnergy: give us money so we can keep running obsolete plants.  Can’t get any clearer than that.

That’s the story with electric holding companies these days.  They aren’t interested in earning money by providing reliable electrical service.  They have now turned to flat out picking pockets.  No wonder the electrical utility industry is circling the drain.

One thought on “AEP & FirstEnergy Want Money for Nothing – Your Money

  1. Bill: Amongst the consortium of pirates and thieves, consistency is a virtue. They have indeed turned from providing a low guaranteed-return, high-need-of-reliability utility into a pack of whining third-graders who complain about the very businesses they bought into. They have all forgotten the precepts of public utility regulation and instead wish to become corporate financial high flyers. I blame the utility executives and their Wall Street backgrounds on this problem. They have no institutional memory of what it is like to serve the public and spend most of their energy (pun intended) on devising new ways to steal the nest egg from under the rate paying public. With just a few exceptions, local PSCs are not helping the problem by letting the utilities have their way with us. They should all be ashamed of themselves.

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