FirstEnergy’s proposed Pleasants sale likely to cost WV ratepayers more than $400 million through 2032, expert says

Unless FirstEnergy Corp. agrees to bear the risks for losses, the Public Service Commission of West Virginia should reject the utility monopoly’s proposed sale of the Pleasants Power Station to FirstEnergy subsidiaries Monongahela Power and Potomac Edison, said David A. Schlissel, president of Schlissel Technical Consulting, in expert testimony submitted Friday, Aug. 25, 2017.

CLICK HERE TO READ THE TESTIMONY IN THE PUBLIC DOCKET.

Schlissel’s research concludes if the FirstEnergy subsidiaries acquire Pleasants, the purchase will likely cost ratepayers more than $400 million through 2032.

Mon Power and Potomac Edison’s analysis is driven by the extremely optimistic, unreasonable assumption that the future of energy market prices and production will be very different from the recent past, he testified.

Schlissel provided expert testimony on behalf of WV SUN and West Virginia Citizen Action Group, members of the West Virginians For Energy Freedom coalition.

The PSC’s proceedings are similar to a legal trial. Today, Aug. 25, is the deadline for WV SUN, WVCAG, and other intervening parties to submit testimony. There will be a hearing in late September at which witnesses will be cross-examined. Commissioners are expected to decide the case in mid-October.

“We are eager to share Schlissel’s findings and testimony with the consumers who will have to foot the bill for FirstEnergy’s corporate welfare if PSC Chairman Mike Albert and Commissioners Brooks McCabe and Renee Larrick approve the deal,” said Emmett Pepper, executive director of Energy Efficient West Virginia.

For nearly 45 years, Schlissel has served as a consultant, expert witness, and attorney on engineering and economic issues in the fields of energy and the environment.

West Virginians For Energy Freedom is a coalition of economic and ratepayer advocacy groups, faith-based organizations, businesses, and elected officials who oppose FirstEnergy’s bailout attempt. Since January, the coalition has been raising awareness about FirstEnergy’s bad deal for Mon Power and Potomac Edison customers.

Other intervening parties include the Consumer Advocate Division of the PSC, the West Virginia Energy Users Group, Longview Power (owner of the Longview coal-fired power plant), the Sierra Club, Harrison County Power and Brooke County Power (owners of two planned natural gas-fired power plants) and the WV Coal Association.

Key conclusions from Schlissel’s expert testimony

  • Mon Power and Potomac Edison’s estimate of the economic impact of the purchase on ratepayers is flawed. Mon Power and Potomac Edison’s analysis is driven by the extremely optimistic, unreasonable assumption that the future will be very different (and much more favorable to the economics of coal-fired generation) than the recent past. If their assumptions were realistic, FirstEnergy subsidiary Allegheny Energy Supply wouldn’t be trying to sell the plant.
     
  • The proposed purchase of Pleasants would likely cost ratepayers over $400 million over the next 15 years. That is because the revenues that will be earned from selling Pleasants’ electricity on the regional electricity market will not be sufficient to cover the costs of owning and operating Pleasants, including a profit to FirstEnergy.
     
  • Mon Power and Potomac Edison do not need to buy another power plant. The companies have used a methodology that overstates their purported capacity shortfall by over 400 MW (more than a third of their alleged 2027 shortfall). There are only a few peak hours out of the year when customer demand is projected to exceed the amount of energy that can be produced at Mon Power’s plants, and Mon Power and Potomac Edison could rely on market purchases during those hours.
     
  • If Mon Power and Potomac Edison acquire Pleasants, they will generate 45% to 78% more electricity than their customers actually need over the next 15 years. This will leave customers exposed to the risk the companies will not be able to profitably sell this surplus energy on the market.
     
  • Schlissel recommends that the Public Service Commission reject the proposed transaction. If the Commission decides to approve the transaction, FirstEnergy – not Mon Power and Potomac Edison customers – should be required to bear the risk that the Pleasants acquisition turns out to be unprofitable.

 

Next steps in the PSC case: Public Hearings

The next major deadline is Sept. 6, the last day to serve discovery requests. Also on Sept. 6, the PSC will be in Parkersburg the first of three Public Comment Hearings around the state. West Virginians For Energy Freedom will host a pre-hearing rally outside the Parkersburg Municipal Building.

Public Hearings and pre-hearing rallies will be held Sept. 11 in Martinsburg and Sept. 12 in Morgantown. Click here for more information on the hearings and rallies.

“It is critical for Mon Power and Potomac Edison consumers to attend or speak at the Public Hearings so commissioners and FirstEnergy know that West Virginians are tired of out-of-state corporations pillaging the Mountain State,” said Karan Ireland, program director for WV SUN.

More key dates
Sept 18: Rebuttal testimony of companies to the direct testimony of other parties and rebuttal testimony of other parties to the direct testimony filed on Aug. 25, with work papers.
Sept. 26-28: Evidentiary hearing.
Oct. 12: Initial briefs.
Oct 19: Reply briefs.