Longview Power LLC President and CEO Jeffery Keffer maintains that there were better options on the table to meet FirstEnergy Corp.’s capacity needs in West Virginia without putting ratepayers on the hook for an uneconomic coal plant.
Longview Power is among the competitive power suppliers that have filed protests with the Federal Energy Regulatory Commission over the proposed transfer of the 1,300-MW Pleasants coal plant between an unregulated FirstEnergy affiliate and a regulated subsidiary.
Monongahela Power Co. in March officially notified FERC and the Public Service Commission of West Virginia of its plans to purchase the coal plant from unregulated affiliate Allegheny Energy Supply Co. The filing was made after Mon Power issued a request for proposals, or RFP, for additional generation capacity in December 2016 and a consultant recommended the acquisition of Pleasants as the “most economical option” at $195 million.
“I think it was pretty clear when we obtained a copy of the RFP and then started also to look at some of the information that had come out of FirstEnergy, that this wasn’t going to be a level playing field and they really had no intention of considering alternatives to Pleasants,” Keffer said.
Nevertheless, Longview Power LLC did enter its 700-MW Longview Power coal plant in Monongalia County, W.Va., into the RFP.
“You can always hope that, in fact, reason will prevail,” Keffer said. “And if the approach to this by the utility was the standard utility approach, which is to find the best asset over the longer term to support your ratepayers … then we would have the opportunity to sell the plant to them.”
Keffer is hopeful that FERC will intervene, similar to the commission’s April 2016 decision to halt generation subsidies proposed in Ohio by FirstEnergy and American Electric Power Co. Inc.
“We feel that there are many very good reasons to oppose this real bailout, in effect, that FirstEnergy is trying to put in place for Pleasants,” Keffer said. “It’s part of an overall scheme relating to the work out of FirstEnergy Solutions Corp.
“The fact that none of [FirstEnergy’s] unregulated companies and plants are economically viable has caused them to move in the direction of trying to get them all regulated or as many regulated as possible or otherwise supported using public dollars and that’s going to be a problem. That should be a problem for anybody who takes a look at this and cares about the markets for energy generation in this country.”
S&P Global Ratings on May 10 downgraded the issuer credit rating on FirstEnergy Solutions to CCC from CCC+, citing its expectation that the FirstEnergy competitive unit will file for bankruptcy within the next 12 months.
FirstEnergy, which is looking to exit the competitive business by mid-2018, said it will review the FERC protests and decide whether to respond.
“The winning bid price of $195 million is far lower than the next bidders who were roughly at $1.66 billion for an equivalent amount of generation capacity,” FirstEnergy spokesman Todd Meyers wrote in an email.
“We believe Mon Power’s proposed purchase of the Pleasants Power Station to resolve a significant projected capacity shortfall is in the best interest of our West Virginia customers and the communities we serve,” Meyers added. “The proposed transaction would lower rates for our customers and help preserve coal-related jobs. The plant employs about 200 people, consumes more than 3.5 million tons of coal and pays millions of dollars annually in property taxes.”
Mon Power’s residential customers could save about $1 per month if the transaction is approved, according to FirstEnergy.
Keffer said that the 40-year-old plant “should be cheap and the fact that it doesn’t appear that anybody else was interested in buying would suggest that perhaps it’s overpriced.”
“But, in any event, it comes back to a very important question: Do they really need this power to support their customers? Do they need this capacity? Do they need this load?”
“I think there’s a lot of evidence that would suggest that they don’t,” Keffer said.