And FirstEnergy Shows Its Hand on HB2201

Today, The State Journal published energy reporter Sarah Tincher’s story on the differing views of HB2201.

In her story, she quoted FirstEnergy PR guy, and our old friend, as follows:

“FirstEnergy is concerned about the way we credit customer generators because we credit them back at a rate that is equal to the retail cost they pay for electricity,” said Todd Meyers, a spokesman for FirstEnergy’s West Virginia subsidiaries, Mon Power and Potomac Edison.

“Those smaller generators get the benefit of using our electrical infrastructure to sell back the electricity they generate without paying to use that infrastructure,” Meyers said. “In principle, we don’t believe it is fair for the rest of our Mon Power and Potomac Edison customers in West Virginia to subsidize small generators.”

So, now FirstEnergy’s PR guy is directly contradicting FirstEnergy’s chief lobbyist Sammy Gray’s statements to the WV House Energy Committee and the WV Senate Judiciary Committee that FirstEnergy interpreted the “cross-subsidization” language in HB2201 as applying only to direct costs of connecting individual net metered customers to a power company.

Has FirstEnergy changed their minds?  Or was Sammy hiding something from WV legislators?

Ms. Tincher does a great job of blowing Toddy’s argument out of the water, by pointing to studies done by PSCs in Missouri and Mississippi:

Among such reports is a Missouri Energy Initiative study, released in winter 2015, which evaluated the benefits and costs of net metering in Missouri, which has a similar fuel mix and retail electricity pricing to West Virginia.

The study quantified the benefits of load reduction and reduced greenhouse gas emissions, in addition to the costs associated with cross-subsidization among consumer groups, and increased administrative costs in managing a new customer class between 2008 and 2012. According to the report, the net effect was positive for the state each year.

The MEI study also suggested benefits of a decentralized energy system, reduced energy prices, local economic boost from manufacturing and installation of net metering systems.

Another study, conducted by Synapse Energy Economics Inc. for the Public Service Commission of Mississippi in September 2014, modeled the costs and benefits of net metering to the state of Mississippi, which doesn’t currently employ a net metering program. The agency’s Total Resource Cost assessment, which included costs of solar panel installation and administrative costs, as well as benefits of avoided costs to the utility, suggested net metered solar rooftop would result in $27 per MWh of net benefits to the state of Mississippi.

FirstEnergy and AEP had better watch out.  If similar studies are done for the WV PSC, they may have to end up paying net metered customers more for their electricity, not less, to pay us for the benefits we give to all customers.  By the way, that is called a feed-in tariff.

2 thoughts on “And FirstEnergy Shows Its Hand on HB2201

  1. If Meyers is going to use the term “SUBSIDY ” and “SUBSIDIZE,” he should learn what the terms mean. Subsidies are payments made to keep the price of a commodity artificially low. There are no “payments” being made.
    If we use Mr. Meyers reasoning, the “small generators” are subsidizing First Energy, because their cost per kilowatt hour is greater than First Energy’s, solely due to economy of scale. This “subsidy” (the use of which I do not accept) is further expanded when the Potomac Edison infrastructure is considered.Some of the lines in use by Potomac Edison presently were constructed and the construction costs paid by the subscribers in the period following World War II. Then POTOMAC LIGHT AND POWER, forerunner of the first POTOMAC EDISON, has depreciated this equipment, and thus the only impact of “using the POTOMAC EDISON INFRASTRUCTURE” must be calculated based upon salvage value only. That should be salvage value based upon initial construction.
    Mr. Meyers further neglects to mention that even this “use of the infrastructure” is only to the nearest user or transformer, which is usually a very short distance, and enhances the electric current available for other transmission.
    Finally, speaking of subsidies, in the real sense of the word, would Mr. Meyers and FIRST ENERGY wish to debate the real subsidies they receive each year through rural electrification, tax credits, subsidized fossil fuels, and untaxed utility rights of way? Though they may help keep rates “lower” for consumers, the purpose of these government subsidies is to keep returns to investors and corporate salaries ARTIFICIALLY HIGH.
    Those are really not subsidies. Those are WELFARE FOR THE RICH.

    • All good points, Danny. The only part of the power company’s equipment that net metered solar producers use is out on the end of the distribution system, almost all of which, as you point out, has been fully depreciated.

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