Regulators OK deals to subsidize older power plants

COLUMBUS (AP) — Regulators in Ohio approved two closely watched energy deals on Thursday allowing two utility companies to impose short-term rate increases on electricity customers to subsidize some older coal-fired and nuclear power plants.

The deals have attracted mountains of written testimony, websites, email-writing campaigns and sparring in television ads. That’s because they follow an old model at a time of sweeping change in the U.S. energy market that consumer groups believe should be driving prices down, not up, and forcing coal-fired plants to close.

Opponents immediately hinted they’d take legal action, most likely alleging the deals are anti-competitive, and a group of independent power producers has asked the Federal Energy Regulatory Commission to intervene in the cases.

The Public Utilities Commission of Ohio took a single combined vote on the power purchase agreements, which were separately filed by Akron-based FirstEnergy and Columbus-based AEP.

With the plans, the power companies seek profit guarantees to cover operational costs at certain aging coal-fired and nuclear plants as they modernize the power grid and transition to cleaner energy sources.

PUCO Chairman Andre Porter said the deals, which had drawn national attention from business, consumer, environmental and energy groups, had been modified to address some of the concerns.

He said the FirstEnergy plan includes a mechanism to further stabilize customer bills during the early years of the eight-year plan, while the AEP plan was also adjusted to minimize consumer impact.

The Alliance for Energy Choice, which opposed the deals, said it was dismayed commissioners didn’t reject both of them outright.

“We hoped that the PUCO would heed the outcry of thousands of Ohio consumers who deluged the offices of the PUCO, Governor (John) Kasich and state legislators with more than 100,000 calls, letters and emails denouncing FirstEnergy’s and AEP’s schemes to charge customers above-market rates, with absolutely no benefit to consumers,” said spokesman Todd Snitchler, a former PUCO chairman.

Porter said it’s the commission’s role to negotiate sometimes competing interests.

“The commission must balance the interests of Ohio’s hard-working citizens, the state’s vital businesses and the public utility companies which we regulate,” he said. “Striking this balance can be challenging.”

The Ohio Consumers’ Counsel, representing utility ratepayers, projected the deals will cost customers an extra $5.9 billion combined over eight years — $3.9 billion for FirstEnergy and $2 billion for AEP. Those figures were calculated before the commission’s additional changes.

The Environmental Defense Fund said it is confident that federal regulators and the courts will not let the agreements stand.

“Today, Ohio regulators showed their loyalties lie with politically powerful polluters rather than the people they are supposed to serve,” vice president Jim Marston said in a statement. “Instead of encouraging investment in abundant, clean energy solutions, these bailouts subsidize old power plants that are dirtying our air — a terrible deal for Ohioans’ health and wallets.”

The Ohio Conservative Energy Forum drew key distinctions between the two plans — crediting AEP with a proposal that makes a long-term commitment to solar and wind energy.

“AEP appears committed to transition to future with cleaner, cheaper sources of electricity; unfortunately, FirstEnergy seems content with sticking small businesses and families with higher electricity bills,” said Mike Hartley, the group’s executive director.

The AEP plan had the backing of the PUCO staff and the Sierra Club.

Akron Mayor Daniel Horrigan called the decision “good for Ohio and good for Akron” benefiting a company that’s “an essential economic driver for our city, state and region.”

“This rate plan balances the interests of customers, economic development and the environment and will help provide stability over the next eight years,” he said.

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