FirstEnergy's proposed Harrison plant sale

Mon Power and Potomac Edison are planning to purchase an 80% share of the Harrison power plant from Allegheny Energy Supply, another subsidiary of their parent company FirstEnergy. Their proposal will raise residential electric rates by 6% for WV and small businesses served by Mon Power and Potomac Edison.

Tell the Public Service Commission to reject this ratepayer bailout of Ohio-based FirstEnergy!

This is a bad deal for West Virginians.

Why does FirstEnergy want to sell us the Harrison plant? Currently the plant is selling into the regional deregulated electricity market, where it must compete with other power suppliers including other coal plants and natural gas plants, renewables, and energy efficiency. Because natural gas prices are so low right now, FirstEnergy wants to protect the plant from competition. In fact, FirstEnergy's profits fell 20% in the third quarter of 2012, in part due to reduced profits in the competitive electricity market. If the Harrison plant can be sold into WV's regulated electricity system, the plant will be protected from competing with regional market forces and its operating costs plus profit will be paid for – by West Virginia ratepayers – for the remainder of the plant’s 27-year life.

The bottom line is that West Virginian rate payers are being sold the power plant for $1.2 billion to bail out FirstEnergy. Alternatives like acquiring natural gas powered generation, continuing to purchase electricity off of the regional electricity grid, investing in energy efficiency, or any combination thereof were never seriously considered.

Would you buy a used car for one price and then turn around and sell it to your son for double the cost?

When Allegheny Power merged with FirstEnergy in 2011, FirstEnergy re-valued the Harrison plant. What was a $550 million asset on Allegheny Power's books before the merger is now a $1.2 billion asset on FirstEnergy's books. Now they are trying to sell it back to West Virginians at the inflated price. If the PSC does allow some portion of the plant to be sold to WV rate payers, the PSC needs to make sure that the sale price of the plant is reduced to its real book value.

FirstEnergy didn't even evaluate the lowest cost option.

FirstEnergy's proposal doesn’t consider an expansion of energy efficiency and demand-side management, even though energy efficiency is the lowest cost and least risk option out of all the options. Nationally, investments in energy efficiency cost an average of 3 cents per kWh saved, compared to 7.4 cents per kWh for energy generated by the Harrison plant.

Even though energy efficiency can't make up all of the company's electricity needs, FirstEnergy should have considered energy efficiency as part of their plan to reduce the need for a major capital investment. We all know from preparing for storms that it’s common sense that you reduce your energy needs before going out and buying the biggest generator available to you on the market. FirstEnergy should do the same to prevent bill increases in the future.

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