AEP, FirstEnergy Press Case to Keep Unprofitable Plants Open

  • Utilities say energy regulator should steer clear of dispute
  • Opponents say plan amounts to bailout of coal generators

American Electric Power Co. and FirstEnergy Corp. defended a plan to keep money-losing coal plants open in Ohio, which opponents say would disrupt the biggest U.S. power market and saddle customers with billions of dollars in extra costs.

The U.S. energy regulator should reject demands to intervene in the dispute, Columbus, Ohio-based American Electric said in a filing Tuesday with the Federal Energy Regulatory Commission. Ohio lies within the region covered by PJM Interconnection LLC, the operator of the wholesale power market that extends from Washington to Chicago.

American Electric and FirstEnergy, based in Akron, want Ohio regulators to allow them to raise customer bills to keep the uneconomic plants in operation. The utility owners say this would save customers money over the long run, and preserve tax revenue and jobs. Their detractors say the proposals amount to a customer subsidy, mostly for dirty, inefficient generators.

At stake are 6,300 megawatts of capacity from coal and nuclear plants, enough to power about 5 million homes. The state’s consumer watchdog argues the proposal would hit 3.2 million Ohio customers with as much as $8.25 billion in unnecessary costs.

"There is no reason for the commission to convene its own hearing to interrupt and second guess the Public Utilities Commission of Ohio’s review," American Electric said in a filing with the agency Tuesday. "There are no changed circumstances that would justify granting the complaint."

American Electric and FirstEnergy have asked Ohio regulators to approve above-market power supply contracts for eight years between their customers and some of their plants that sell power in PJM. The utilities want to bill customers for any shortfall between the sales price and the cost to produce it.

“We do not believe that any additional permissions from FERC are required,” Doug Colafella, a spokesman with FirstEnergy, said in a phone call Tuesday. 

The Electric Power Supply Association, a Washington-based lobbyist group for electric providers, protested the contracts Jan. 27, saying that it amounts to a bailout of inefficient power plants that would disrupt the markets by unfairly depressing prices.

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