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West Virginia

November 7, 2013

West Virginia group appeals ruling on Harrison plant deal

MORGANTOWN — West Virginia Citizen Action Group asked the state Supreme Court on Wednesday to overturn a Public Service Commission decision allowing the sale of a coal-fired power plant between FirstEnergy subsidiaries.

The group said last month it would challenge the sale of the Harrison Power Station, arguing the $1.1 billion transaction is inflated by hundreds of millions of dollars.

The PSC approved the sale, subject to some conditions, and said it reduce Mon Power rates by $16 million a year.

The transaction involves Ohio-based FirstEnergy subsidiaries Mon Power and Potomac Edison, and affiliate Allegheny Energy Supply.  

Mon Power would buy the remaining 80 percent of the 1,984-megawatt Harrison County power plant that it does not currently own. In exchange, Mon Power would sell 8 percent of its interest in the Pleasants Power Station to Allegheny Energy Supply.

FirstEnergy spokesman Todd Meyers said the appeal was no surprise, and the utility will review it. He said the sale has been consummated and has cut the average residential bill by $1.50 a month.

“And as we’ve said all along,” he said in an email, “the transaction will supply our customers with electricity produced in the heart of our West Virginia service territory and help provide greater rate stability or our customers.”

The petition asks the court to set aside the PSC ruling because it violates both state law and the commission’s past orders.

“FirstEnergy is the clear winner in this deal,” said Gary Zuckett, executive director of the Citizen Action Group. “The illegal markup that FirstEnergy has tacked onto the price of Harrison equates to $500 from every Mon Power and Potomac Edison customer in West Virginia.”

The commission set some conditions it said would protect ratepayers, including provisions for a refund of a portion of the purchase price if the Federal Energy Regulatory Commission determines the amount charged to ratepayers exceeds the plant’s fair-market value.

Citizen Action said the price markup ruling violates stipulations of the merger agreement and contradicts commission policy. It has pointed to a dissenting opinion from Commissioner Ryan Palmer to bolster that argument.

Palmer said the value was “not reasonable” and would hurt ratepayers. The companies used financial models that are “flawed and results-driven,” he said, and the deal will likely harm their overall financial condition.  

The PSC’s Consumer Advocate Division had also argued the markup was a transparent effort to bail out FirstEnergy, which publicly announced earlier this year its need to reduce debt by $1.5 billion.

The utility has long argued that the deal would ensure Mon Power can meet its demand through 2020, providing about 1,500 megawatts of additional power, or enough to supply about 1 million homes.  

The company supplies electricity to both its 385,500 customers and 132,000 Potomac Edison customers in the state’s Eastern Panhandle.  

 

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