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FES Worth Less than its Debt

February 24, 2017

On an investor call this week, FirstEnergy indicated that the company experienced a loss of $6.2 billion in 2016 on sales of $14.6 billion.  CEO Chuck Jones discussed the possibility of bankruptcy for FirstEnergy Solution(FES), the generation-owning subsidiary of the company.

The company took a large write-down of its Ohio and Pennsylvania generating assets.  FES is now valued at $1.6 billion. It’s total long-term debt is $3 billion.

The CEO said FirstEnergy aims to exit the generating business by 2018.  It will sell or close the plants, he indicated.

Meanwhile, the company is seeking legislation that would provide very large customer-paid subsidies for its two Ohio nuclear plants.  Obviously, such subsidy mandates would make the plants more valuable to a purchaser.  Just as obviously, the subsidies would punish ratepayers with no benefit.  2/23/2017

Upcoming Plant Tour of Combined Heat & Power Installation

February 24, 2017

There is a growing interest among Ohio manufacturers to better understand the benefits, feasibility and hurdles to combined heat and power applications (CHP).

Therefore, the OMA Energy Efficiency Peer Network (EEPN) has scheduled its next plant tour for Thursday, March 9 at the Solvay Specialty Polymers plant in Marietta, Ohio.

The Solvay Specialty Polymers facility in Marietta features a new combined heat and power plant. The tour is hosted by Solvay, Varo Engineers and DTE Energy Services.

Limited to 30 registrants; must be a manufacturing member of OMA to participate.

See the event and registration details here.  2/20/2017

DP&L Files Proposal for $625M from Customers over 5 Years

February 17, 2017

Dayton Power & Light (DP&L) is litigating a proposal at the Public Utilities Commission of Ohio (PUCO) that, if approved, will allow it to impose more above-market charges on customers in its service area. The estimated cost of the rider is $625 million over five years. The rider will not be by-passable by shopping with a competitive supplier.

DP&L intends to use the $625 million to reduce its debt and allegedly invest in its grid; however, this is too large of a subsidy to bailout DP&L’s parent, DPL Inc., and the holding company, AES. There are also many other proposed above-market charges embedded in the proposal that will cost customers even more money during the term of the proposal.

We have estimated the potential cost to DP&L customers. Click here. OMA energy counsel Carpenter Lipps & Leland has prepared this analysis of the case.

The OMA Energy Group is opposing the measure. OMA members can take action by making a phone call to or arranging a meeting with elected officials to express opposition to this proposal. Contact Governor Kasich (contact information) and your state senator and state representative (look up here).

Here is a sample letter (in Word) for communicating with elected officials.  2/14/2017

Governor Makes Appointments to PUCO

February 17, 2017

Late this week Governor Kasich announced the following appointments to the Public Utilities Commission of Ohio:

Lawrence R. Friedeman of Waterville (Lucas Co.) will replace M. Howard Petricoff. Friedeman received his bachelor’s degree and juris doctorate from University of Pittsburgh. He is currently Vice President of Regulatory Affairs and Compliance at IGS Energy.

Daniel R. Conway of Upper Arlington (Franklin Co.) replaces Lynn Slaby, whose term is expiring. Conway received his bachelor’s degree from Miami University and his juris doctorate from the University of Michigan. He is currently an attorney at Porter, Wright, Morris and Arthur LLP and is an adjunct professor at The Ohio State University Law School.  2/16/2017

Ohioans Prefer Energy Choice

February 10, 2017

A recent poll of Ohioans found support for the benefits of a deregulated energy marketplace. The Fallon Research firm was engaged by the Alliance for Energy Choice to measure Ohioans’ attitudes and opinions about energy policies.

  • 91.5% oppose changing Ohio law to allow utilities, like AEP and First Energy, to charge customers for the cost to build their new plants.
  • 78.7% oppose a change in law that would eliminate the ability to shop for the best price for electric and natural gas service from a variety of providers and require customers to take services only from their local utility.
  • 62% disagree that utility customers should pay the additional cost to support uneconomical power plants because it may preserve jobs in certain communities.
  • 55.5% agree that Ohio should increase electric market competition, even if it means the elimination of the government-mandated electric utility monopoly that has existed for decades.

Here are all the results2/6/2017

Rover Pipeline Gets Go Ahead from FERC

February 10, 2017

Last week, the Federal Energy Regulatory Commission (FERC) issued a certificate of public convenience and necessity for the Rover Pipeline project. The Coalition for the Expansion of Pipeline Infrastructure (CEPI), of which OMA is a member, applauded FERC for releasing the certificate after two years of thorough review.

Once in operation, the Rover Pipeline will fill a critical need of natural gas producers in the Marcellus shale region. While production levels have steadily risen in recent years thanks to new extraction technologies, the ability to transport those resources to end markets has been lacking. Now, with the Rover Pipeline clearing a major regulatory hurdle, natural gas producers in Ohio, Pennsylvania, and West Virginia are one step closer to meeting demand for affordable, domestically-produced natural gas.  2/6/2017

Petricoff Back at PUCO

February 3, 2017

Just a month after stepping down as a member of the Public Utilities Commission of Ohio (PUCO) amid pressure from Senate Republicans, M. Howard Petricoff has been hired in a top staff job at the PUCO.

As chief analyst of the PUCO, Petricoff will be in a key position to help the state agency balance the needs of customers with those of regulated public utilities in accordance with Ohio law.

Congratulations to Mr. Petricoff!  2/2/2017

Electric Re-Regulation or Surgical Strike?

February 2, 2017

During a recent investor call, AEP CEO Nicholas Akins commented about what a utility-driven re-regulation legislative proposal might look like saying, “There are already drafts of legislation circulating.”

According to reporter John Funk of the Cleveland Plain Dealer who summarized the AEP call, Akins said: “The companies have been looking for a way to escape the perils of market prices that come with deregulation or at the very least craft ‘surgical’ amendments to state laws that since 2000 have been gradually moving the industry into market-based pricing.”

Funk noted that AEP wants to build wind and solar farms and maybe new gas plants, and that FirstEnergy is interested in finding a way to subsidize its two nuclear power plants.

The OMA opposes customer paid subsidies to utilities for non-economic activity and has been fighting utilities’ proposals at the PUCO through its OMA Energy Group. Markets, not regulators, deliver better service, price and innovation.

Join a discussion about re-regulation legislation potential at the February 9 meeting of the OMA Energy Committee.  Register here2/2/2017

Markets v Command-and-Control Regulation

January 27, 2017

Are markets reducing the cost of electricity generation relative to command-and-control regulated
dispatch? This study from the University of Chicago answers this question.

The study finds that markets reduce the cost of generating electricity by about $3 billion per year through increased efficiencies and coordination both within and across areas.

By using the lowest-cost plants 10% more often, markets reduce the costs from using uneconomical units by 20% per year. Additionally, the cost reductions from trading electricity across regions increases by 20% per year.

The report concludes:  “As policymakers are faced with the question of whether the de-regulation of electricity markets should be expanded or scaled back, these findings suggest the benefits realized by more efficient allocation of output though market-based dispatch have far outweighed any imperfections in the market system.”  1/26/2017

PUCO Nominating Council Sends Names to Governor

January 27, 2017

The Public Utilities Commission of Ohio (PUCO) Nominating Council this week submitted the names of five finalists to be considered by Gov. John Kasich to fill two commissioner positions.

The Nominating Council recommended the following individuals to fill the unexpired term ending April 10, 2020: Daniel Conway, Lawrence Friedeman, J. Edward Hess and Raymond Lawton.

The Nominating Council also recommended Gregory Williams be included for consideration for the five-year term commencing on April 11, 2017 and end April 10, 2022, along with the remaining three individuals from above not selected by the governor.

The PUCO Nominating Council is a 12-member panel charged with screening candidates for the position of commissioner.  1/26/2017