Energy Management

Goldman Downgrades FirstEnergy

Goldman Sachs this week downgraded FirstEnergy stock from “neutral” to “sell.”

FirstEnergy has a cash problem; at risk is its investment grade bond status.  Goldman speculates that the company will need to issue additional stock to raise more than $1 billion.

Meanwhile, FirstEnergy continues to push for a massive bailout by customers.  Recently, PUCO staff had recommended a customer-paid, above-market subsidy of $131 million a year for three to five years.  In rebuttal testimony this week, FirstEnergy said it needs $558 million a year from customers for the next eight years, or $4.46 billion, to keep an investment grade bond rating.

However, information that surfaced in depositions reveals that FirstEnergy is actually seeking almost double this amount.  (See related story.)

FirstEnergy Stuns with New Ask for Subsidy

This week, in response to a proposal submitted by the Staff of the Public Utilities Commission of Ohio, FirstEnergy filed another customer-paid subsidy proposal to the PUCO asking regulators to approve more than $4.46 billion in above-market customer charges over the next eight years as a subsidy to buffer FirstEnergy’s precarious balance sheet.

Energy lawyers participating in the proceedings this week were shocked to learn that in addition to requesting $558 million annually from customers ($4.46 billion over an eight-year term) for credit support for FirstEnergy Corp., FirstEnergy is seeking an additional customer surcharge in exchange for FirstEnergy Corp.’s commitment to maintain its corporate headquarters and nexus of operations in Akron, Ohio.  This additional charge could cost customers up to an additional $568 million per year for eight years.  If approved, FirstEnergy’s new proposal could cost FirstEnergy’s Ohio distribution customers up to $1.126 billion per year ($558 million + up to $568 million) for eight years.

FirstEnergy testimony states that: “The annual amount would equal the $558 million associated with the credit support of jump-start grid modernization and the additional amount not [to] exceed the economic development value outline[d] by Company witness Sarah Murley arising from having the FirstEnergy Corp. headquarters and nexus of operations in Akron, Ohio.”  In her testimony, Ms. Murley quantifies the economic development value at $568 million per year.

The OMA Energy Group has been litigating against unjustified customer paid subsidies.  Tom Lause, VP, Treasurer, Cooper Tire & Rubber Co., recently testified in opposition to a FirstEnergy aid package proposed by PUCO staff.  Contact OMA’s Ryan Augsburger to learn more how your company can support the effort to protect Ohio manufacturing competitiveness.

Ohio Natural Gas Production Topic of RNC/DNC Conventions

During both the RNC and  DNC conventions, the American Petroleum Institute (API) held opportunities for party leaders to learn more about important domestic energy industry trends.

In conjunction with the RNC convention in Cleveland last week, API described how Ohio natural gas production is up nearly one thousand percent since 2005.  The organization also shared statistics detailing how increased natural gas is yielding economic benefits to Ohio.

API President and CEO Jack Gerard was on hand to share how the increased use of natural gas has lowered carbon emissions from electric power generation throughout Ohio.  Here’s Mr. Gerard’s speech.

Exxon Mobil to Present 50 Year Energy Forecast to OMA Energy Committee

Mark your calendar to attend the OMA Energy Committee on Thursday, August 25 to hear a number of good energy topics including:

• Exxon Mobil 50 year energy forecast
• Updates on PUCO cases that affect your cost of electricity, including FirstEnergy’s pending proposals
• Best energy management practices
• Electricity & natural gas market reports

You can come in person (the meeting will be held at the OMA office and includes a nice lunch) or via call-in.

There is no charge; register here.

OMA Testifies at PUCO Against FirstEnergy Bailout

Pictured: Tom Lause, VP, Treasurer, Cooper Tire & Rubber Co.

Whereas PUCO staff has recommended denial of FirstEnergy’s rider proposal, a “virtual” power purchase agreement that could cost customers $3.6 billion, staff has recommended the creation of a “distribution modernization rider” that would allow FirstEnergy to annually recover $131 million per year from customers over the next three years, with a potential two year extension.

One of the stated purposes of staff’s proposal is to enable FirstEnergy to maintain an investment grade rating.

Testifying before the PUCO last week on behalf of the OMA Energy Group, Cooper Tire & Rubber Co. Vice President, Treasurer, Tom Lause, said:  “… The corporate bailout proposed by Staff will actually diminish diversity of supply and suppliers and limit consumers’ effective choices over the selection of those supplies and suppliers over the longer term. … The Commission should allow the competitive markets to work and not provide competitive advantages to certain generators.

“… Currently, it is my understanding that there are significant new generation resources scheduled to come online and a healthy capacity reserve margin in the PJM market; therefore, there is no need to raise funds to support one generator’s business over another.

“… Rather than receive a bailout from customers under the Staff’s Proposal, FirstEnergy Corp., similar to all other public companies, should be required to consider and make financial business decisions that would allow it to sustain an investment grade credit rating. …”

OMA Group Tours Energy Efficiency Innovations

This week the OMA Energy Efficiency Peer Network (EEPN) visited The Dannon Company and the Village of Minster solar field to see innovative energy efficiency installations.

If you’d be interested in participating in future plant tours and other EEPN activities, click here.  Manufacturing members are invited and there is no charge.

Senate Grills Governor’s PUCO Appointee

This week the Senate Public Utilities Committee held a hearing to consider Governor Kasich’s recent appointment to the Public Utilities Commission of Ohio (PUCO), M. Howard Petricoff.

Members of the Senate peppered Mr. Petricoff with questions about possible conflicts of interest.

Mr. Petricoff, a respected utility lawyer who recently retired from the Vorys law firm, adeptly handled the questions but the Senate Committee Chair did not call for a confirmation vote.

Committee Chairman Senator Bill Seitz told the media that Senate confirmation would likely occur sometime this summer.

The OMA wrote to Senate President Faber in support of Mr. Petricoff’s appointment.  Some utilities are advocating against Petricoff’s appointment since he has represented competitive electricity suppliers.

Come on Our Plant Tour: Dannon Company & Village of Minster Solar Field

The OMA Energy Efficiency Peer Network (EEPN) has scheduled a plant tour on Wednesday, July 20 at the Dannon Company, Inc. 216 Southgate Dr., Minster, Ohio 45865.  The tour will focus on energy efficiency and sustainability initiatives.  A hosted lunch will follow the tour.  The event starts at 9:30 a.m. and concludes at 1:00 p.m.

But wait, there’s more!  The Village of Minster has graciously agreed to host a tour for the OMA EEPN of its 3 MW solar array and 7 MW lithium-ion battery, the first municipal electric solar-battery system in the U.S.  This tour will immediately follow the Dannon tour.  Interested members can caravan to the solar site at 1:30 p.m. for a 1-hour tour and discussion.

Spaces are limited; please register by close of business today, July 15th.  Register here or contact Peter Kleinhenz.

Good News, Bad News from PUCO Staff

PUCO staff has recommended denial of FirstEnergy’s rider proposal, a “virtual” power purchase agreement that could cost customers $3.6 billion.  That’s the good news.

Staff said the proposed rider does not preserve resource diversity in the state, does not protect Ohio’s local economies from harms associated with plant closures, and could interfere with FERC’s authority over the wholesale markets.

Here’s the bad news:  Staff recommended the creation of a “distribution modernization rider” that would allow FirstEnergy to annually recover $131 million from customers over the next three years.  One of the stated purposes of staff’s proposal is to enable FirstEnergy’s parent company to maintain an investment grade rating.  One of the conditions attached to staff’s proposal is that FirstEnergy must maintain its corporate headquarters in Akron.

So, the pretense that the proposal was to keep generating plants in operation to protect customers from future price increases is gone.  It is a bailout.  Just as the OMA Energy Group and others have said from the beginning.

The OMA Energy Group will continue its opposition.  Customers should not be on the hook for FirstEnergy’s poor business decisions for its generation subsidiary.

Senate Sets Hearing on Petricoff Appointment

Hours after Governor John Kasich appointed veteran energy lawyer Howard Petricoff to the Public Utilities Commission of Ohio, the Ohio Senate President called for formal hearings to determine Petricoff’s qualifications.

In his press statement, Senator Keith Faber said: “Senators have expressed some concerns about Mr. Petricoff’s inability to hear many of the cases pending before the commission due to conflicts of interest involving past legal work.”

The Senate Public Utilities Committee will meet on Tuesday, July 12, to consider the appointment.

Rumor has it some utility companies are advocating against the Petricoff pick.

The OMA supports the appointment of Petricoff, who is eminently qualified, by Governor Kasich.