West Virginia Citizens Action Group, the only party to refuse to sign FirstEnergy's Harrison settlement, filed an Objection to the settlement with the PSC this afternoon.  The Objection asks that the Commission "...disapprove the proposed settlement and that the Companies’ petition be denied in its entirety."

WVCAG is the only party that didn't cave in and go along with that sugarcoated flashing blue light special settlement the others were pressured into signing.

What?  Pressured?  That's what I think.  Some people accuse me of having too much imagination, but if you pick up a crayon and start connecting the dots, a perplexing picture begins to form.

The public has been increasingly dissatisfied with the actions of the WV PSC over the past several years.  It's not just some obscure agency nobody has ever heard of anymore.  High profile rate cases, the PATH project, and now the intra-company coal plant sale cases have promoted the WV PSC to common dinner table talk.  As well, public anger over the FirstEnergy/Potomac Edison billing investigation has raised the ire of legislators.  The WV PSC, with one expired Commissioner and another re-appointed but not yet confirmed by the Senate, does not want any nasty utility public relations poo stuck to its shoe.  Any decision it would have made on FirstEnergy's Harrison transfer (other than a denial) would have produced more citizen and legislative scorn, possibly turning into the straw that broke the camel's back.  So, the Commission slunk out of the emergency exit by not having to make a real decision.  Because the case was "settled," blame for what went wrong can be foisted off on the settling parties.

The Consumer Advocate will be retiring at the end of next month.  A new one will be appointed by the Chairman of the PSC (let's not even worry about what a very stupid idea this is right now!)  Any consumer advocate division employees who may be hopeful of moving up to the top spot and filling the vacancy would be beholden to pleasing the Chairman right now.  Perhaps one way to cement the Chairman's approval would be a willingness to divert public anger from the Chairman (who doesn't need anymore public disapproval before his re-appointment is confirmed).

Once the PSC staff and Consumer Advocate rolled over for FirstEnergy, the rest of the parties just went on a feeding frenzy to pick up what stray crumbs they could (with the exception of WVCAG, who exhibited good, old fashioned ethics).

Maybe I just think too much... or maybe I just know too much.  Anyhow, that's my theory of why this happened.

But... here's something else to think about!

How did a proposal that FirstEnergy said would raise your electric rates 6% settle for a 1.5% decrease in your rates?

The settlement changed the amount of the $1.1B purchase price consumers will pay by requiring Mon Power to book a $300M+ impairment for a portion of the purchase price.  The cost ratepayers will have to pay is $795M.  An impairment is an amount that comes out of shareholder dividends, instead of out of your pocket.

In addition, the $25M credit for the included sale of Pleasants will be amortized over the first 16 months of new rates, which causes an artificial and temporary rate reduction that will expire at the end of 2014.  Without this Magic Math, there would be no "decrease." 

This resulted in a yearly surcharge (rate increase) of $113.4M.

However, this rate increase was offset by a $129.5M yearly credit that FirstEnergy will include in their projected rates through the end of 2014.  This $129.5M is based on projections, not reality.  At the end of 2014, this projection will be trued up with actual expenditures and the resulting shortfall will turn into a rate increase.  From the look of FirstEnergy's unrealistic projections (cooked for the transaction proposal to show what FirstEnergy wanted them to show), it's going to be a BIG rate increase of a magnitude never before experienced.

The difference between $129.5M and 113.4M is only $16M.  While $16M sounds like a lot of money, it's a very small margin for error at a company whose annual coal costs are estimated at well over $500M and whose annual revenue from off-system sales of Harrison's excess electricity are nearly $300M.  If FirstEnergy's calculations are off just $16M, then your rate decrease completely disappears.  If they're off by more than $16M, the rate increase starts.

In addition, as the proud new owner of a creaking, old coal plant, you're now fully responsible for the expected $244M cost of retrofits to comply with EPA rules.  FirstEnergy opted to close other coal plants rather than spend their own money to retrofit, but in this case, they're spending YOUR money.  This $244M cost will also translate to more rate increases. 

So, enjoy your temporary "rate decrease," because the rate increase you're going to receive on January 1, 2015 is going to be a shocker.  But, Chairman Albert hopes his re-appointment will be safely in the bag by that time and that you all will have forgotten all about this crappy deal he handed you.

FirstEnergy filed a proposed settlement with the WV PSC today.  The settlement requests approval of the internal sale of Harrison between two FirstEnergy subsidiaries at full asking price, and includes a few cheap parting gifts for some of the other parties in order to thank them for playing the FirstEnergy Corporate Separation Issues Game.

The settlement must still be approved by the WV PSC, but as I told a reporter this afternoon, chances of the PSC not approving a settlement in this case are slim to none.  But, if you'd like to vent about this crazy miscarriage of justice and the PSC's lack of leadership and vision for West Virginia and how it continues to cost ratepayers money, feel free to let them have it (select case number 12-1571 from the drop down list).

So, let's jump in here, shall we?  The parties to this case included FirstEnergy, PSC staff, the Consumer Advocate ("your" representative), the West Virginia Energy Users Group (representing the interests of a group of industrial electric customers, such as Essroc Cement), different union groups representing labor, the Sierra Club, the WV Coal Association (representing our friend coal), a couple of West Virginia natural gas trade associations and the West Virginia Citizens Action Group.  All parties either agreed to this appallingly bad settlement, or took no position (the gas groups).  The only hold out was West Virginia Citizens Action Group, who opposes the settlement.  Good for you, WV CAG!  At least some organization is sticking up for the public interest.  The rest of the parties?  Yeah, they all went creeping off with their tail between their legs after FirstEnergy threw them a cheap, carnival prize.  Let's take a look at who got what:

1.    West Virginia Coal Association - got this limp, meaningless statement inserted in the settlement:
"The Companies will maximize the amount of West
Virginia coal to be burned at Harrison consistent with the obligation to procure reliable sources of coal at the lowest available cost and other relevant West Virginia statutory provisions."  It does nothing.  Congratulations, coal!  For this, you sold ratepayers down river!

2.    Labor - got the promise that FirstEnergy will create 50 new jobs in West Virginia.  You will pay for these jobs in your electric bill, of course.  The jobs cannot be related to the Potomac Edison billing General Investigation (no new meter readers!) and cannot be legal, accounting, finance or rate jobs (no white collars -- blue only!) and should be in the distribution sector as directed by PSC staff.  This probably means more linemen, which really can't be a bad thing, however, it does nothing to ameliorate the billion dollar cost of owning Harrison.  Congratulations, labor!  For this, you sold ratepayers down river!

3.    WV Energy Users Group - got an "Economic Stability Credit" that will total around $2.3M in electric rate credits to industrial rate classes K & PP.  Congratulations, WVEUG!  For a crappy $2.3M in your own pocket, you sold ratepayers down river!

4.    Sierra Club - got a promise from FirstEnergy to retire $100K of Renewable Energy Credits so that someone else is required to buy them.  The credits will not be available for trade in WV's ineffectual Alternative & Renewable Portfolio Standard.  But since that was such a crappy gift, Sierra Club also got the promise of a plan to create a program to increase energy efficiency by reducing electricity usage by .5% (yes, that's one-half of one percent) of 2013 sales by 2018.  You will pay extra for that though, little ratepayer, although those industrial users may opt out of paying their share as long as they don't use the program.  Congratulations, Sierra Club!  You probably were never really interested in having the WV PSC deny the transaction, you just wanted to get your free gifts (at ratepayer expense)!  For this, you sold ratepayers down river!

5.    Governor Earl Ray Tomblin (wait, he's not a party!) - got a $500K contribution to his "Kids First" program over the next five years.  This program will "support" energy efficiency in schools.  But, wait, that's not all the trinkets that were rained down on our state government!  There was also $500K over the next five years to state low-income energy assistance programs, and an additional $500K over five years to the WV Office of Economic Opportunity Weatherization Program (yes, the program that was investigated for mismanaging funds by giving preference to program employee relatives, paying contractors who hardly worked, etc.).  This contribution is in addition to the $250,000
amount currently included in rates as a result of the Joint Stipulation in Case No. 09-1352-E-42T.  !PLUS! Another $250,000 per year, funded by customers, paid toward WV's low-income assistance Dollar Energy Fund.  It's awful nice of FirstEnergy to give away our money to get the assistance of the state in screwing its electric consumers out of over a billion dollars.  Congratulations, Governor Tomblin!  For this, you sold ratepayers down river!

6.    WV PSC Staff and Consumer Advocate - got some really masterful corporate bookkeeping hocus pocus that will keep the financial magnitude of this transaction from becoming a reality for struggling consumers for the next 16 months.  Because this transaction includes not only the purchase of Harrison, but also the sale of Pleasants, there are actual credits that will reduce ratepayer liability.  However, our thoughtful regulators have included the $25M in credits upfront over the first 16 months of ownership, instead of applying the credit over the useful life of Harrison (life of Harrison - 27 years, life of Pleasants credits - 1.33 years).  It only makes it look like the transaction doesn't cost as much as it did.  In addition, our regulators arranged to allow FirstEnergy to create a regulatory asset (or holding account) for deferred costs to include a whole bunch of little charges and actual amounts spent so you won't see them in your bill today (but eventually you will pay the charges, with interest!)  The best part, though, is the $129M yearly credit to rates that will supposedly come from Harrison's sales revenue and cost reductions.  This magical money machine will completely obviate any rate increases and actually result in a 1.5% decrease in your rates (unless you're an industrial customer, then you get a 5% decrease because you had a lawyer at the table).  Now stop and take a moment to reflect on this:  If this transaction was always going to reduce rates over the long run, do you think all these parties would have wasted time and money opposing it?  Of course not, FirstEnergy and the settling parties are lying to you with a sugar-coated, alternative version of reality, hoping you don't get too angry at the way they have failed you, the ratepayer. The Consumer Advocate has so thoughtfully swept the nasty bits under the rug, instead of protecting your interests for a change.  Some advocate.  What a joke!  For this, you sold ratepayers down river?

There's also something really funky going on with accounting for a reduction to the full purchase price that is to be written off (or is it?  only the phantom knows!).  The amount added to rate base that you'll be paying off over the next 27 years is $795,851,333.   Isn't that funny?  Looks like someone wanted to "split the difference" with FirstEnergy and assume half of the inflated merger book value that should never be recovered from ratepayers.  Half-a-Loaf Harris strikes again!  Depending on which section of the settlement, or which Exhibit you're reading, FirstEnergy is going to book an impairment of anywhere between $256 to 351M.  Yes, FirstEnergy's accounting leaves much to be desired, but our representatives have historically proven themselves completely clueless about regulatory accounting and inept at recognizing when they are being cheated, so this is probably just one of those "regulatory got'chas," this time directed at ratepayers.  It's a regular little (Gary) Jack-in-the-Box that's going to pop out eventually as time continues to crank the handle of this box of balefulness.

Fitch Ratings issued a report* today that says PJM's recent capacity auction results "indicate that a strong rebound in regional power prices appears unlikely."

Despite a whole lot of big talk by investor owned utility CEOs over the past several years that demand is going to explosively rebound at any second, the analysts aren't buying it.  And furthermore, prospects for PJM merchant generators will remain "dim" for the foreseeable future.

What has killed prices on PJM's capacity market?

1.    Demand management (users who are paid to reduce usage at peak demand periods)

2.    Energy efficiency (users who are using less electricity overall through energy saving improvements to their home or business)

3.    Distributed Generation (users who are now producing their own electricity on site)

This isn't really a big surprise.  We've been talking about this here on the blog for quite a while.  What is news is that now the credit rating agencies are also acknowledging it.

"Fitch expects demand response (DR), energy efficiency (EE), and distributed generation (DG) will play a large and growing role in PJM, either reducing total demand or displacing existing traditional generation thereby exerting a restraining, secular influence on future power prices."

This is bad news for companies like FirstEnergy.

"Capacity auction prices under the reliability pricing model (RPM) signal ongoing pressure on electricity margins and credit metrics of merchant generation companies operating in PJM. Fitch expects these companies to continue to rationalize operations to mitigate revenue and margin pressure, and sustain creditworthiness. Utilities most at risk are investment-grade-rated affiliated generators with high debt burdens relative to cash flows and earnings."

Even FirstEnergy's plan to "sell" one of their merchant baseload coal plants into West Virginia's regulated environment can't save them now.  It looks like FirstEnergy will continue to flounder financially while it attempts to rip off its customers, and consumers in general, in order to try to fool investors and stay a float just a little while longer. 

This is good news for consumers!

*Registration required (but it's free and worth it!)

This article in the Pittsburgh Business Times says that FirstEnergy has begun issuing "layoff notifications" to employees of its Hatfield's Ferry and Mitchell plants that are slated for closure on Oct. 9.

Last week, PJM Interconnection determined that the two plants are necessary for the reliability of the electric grid it manages.  As a result of PJM's determination, FirstEnergy will be paid generously to keep the plants open until upgrades to the grid or new generators can come online.

Either FirstEnergy is playing coy in a sad attempt to up the ante on cost to remain open, or he really is going to run the two plants all by his lonesome, assisted by his completely useless evil hench-staff and a couple of cocktail waitresses.

Note to self:  Buy fuel for generator.

FirstEnergy's union workers have sent a letter to Federal Energy Regulatory Commissioners asking that the agency's Office of Enforcement initiate an investigation into FirstEnergy's gaming of coal plant closures.

The union states that "...the retirements may also have a detrimental effect on energy, capacity and ancillary prices in the PJM Regional Transmission Organization (PJM)."

The union further reasons: 

"We are concerned that prematurely retiring such a large amount of apparently economic generating
capacity could lead to an increase in energy, capacity and ancillary service prices, to the benefit of FE's remaining facilities."

"This concern is heightened by FE's failure to explain adequately the bases for its plans.  With nearly two years remaining before the MATS closure deadline, FE's decision not to invest in MATS compliance fails to justify its evident rush to deactivate the plants. The decision is
likewise not explainable as the consequence of  "continued low market price(s] for electricity."  While the 2013 PJM capacity auction resulted in relatively lower prices (and a decline in the amount of coal-fired  generation clearing the auction), those results apply to the period 2016-2017, which is after the April 2015 MATS compliance deadline. FE has not shown that
either plant is losing money, nor are we aware of any efforts to sell the plants.  In these circumstances, a premature closing of the units may constitute a form of physical withholding and an improper effort to affect market prices."

In addition to being concerned about its own members, the union says, "...consumers deserve assurance that FE's action will not harm reliability or artificially inflate energy and capacity prices in PJM."

They wrap up:

"We urge the Commission to investigate FE's actions. In particular, the Commission should investigate FE's internally-stated reasons for the proposed closure date and any related business studies and cost-benefit analyses. Such an investigation would be in the public interest, consistent with the Commission's anti-market manipulation and rate regulatory authority, and in
the interest of the communities affected by FE's action."

Why, sure, I'd love to see those studies and analyses, too.  How about it FE, want to share?

Chances of FERC acting on this?  Slim to none.  FE's plant closure market manipulation must be perfectly legal because those minding the store continue to allow it to happen unfettered.   Of course it's going to artificially inflate energy and capacity prices that consumers must pay and create profits for the flailing FirstEnegy financials.  That's what this game is all about!

Even rats know when to abandon a sinking ship.  These guys should start looking for other jobs.  I'd like to see Tony the Trickster keep just one plant running with the help of his million dollar henchmen and a couple of cute cocktail waitresses.  Got candles?

"Woof, woof," said Ms. Lindy.

"An intruder has been spotted in the driveway!  He looks like this..."

But when I looked outside, it was just an

wearing a

and driving a pick up truck that had orange and blue stripes, like this, but also a confusing logo that said "Potomac Edison"

To add to our confusion he wasn't wearing a

So we couldn't be sure whether he really was a Potomac Edison meter reader or a ninja burglar.

What do you think?

Wow, what a shocker!  FirstEnergy's grid monkey, PJM Interconnection, has determined that the two coal-fired power plants the company recently announced for closure in October are necessary for reliability.  In order to keep the plants open until FirstEnergy can further add to its corporate coffers by making transmission upgrades to take the place of these two generators, PJM will offer the company what's known as reliability must run (RMR) contracts.  RMR contracts provide a big pay day for FirstEnergy in exchange for extending the closing date of Hatfield's Ferry and Mitchell and keeping the plants available to ensure reliability.  And, like every other dime PJM spends, the money for the RMR contracts is added to your electric bill.  How long will this last, how much will it cost consumers, and how much will FirstEnergy profit from its plant closure game?  Nobody knows.

PJM is an industry-run cartel.  How else can companies like FirstEnergy continue to play the same game over and over and get away with it?  According to PJM's rules, a generator must only give 90 days notice that it will close.  Can PJM build a replacement generator or make necessary transmission upgrades in 90 days?  Of course not.  Did this rule ever make any sense, or was it specifically set up to be gamed in this fashion and produce unearned profit for PJM utilities?  The only way you can prevent being gamed this way is to build your own generator by installing solar or another renewable resource on your home or business.

FirstEnergy's decision to close these plants, followed by a subsequent decision to keep them open indefinitely isn't fair to its workers either.  Closing the plants on short notice without providing a transition plan for the employees is bad enough, but now FirstEnergy prolongs their agony by dragging it out.  Maybe the company should use this reprieve to help their employees find or train for new jobs, but they won't.  FirstEnergy simply doesn't care.  Will FirstEnergy share its RMR windfall with these displaced workers to ease their transition to new jobs? Of course not, that extra money goes in Tony's pocket!  Workers are expendable to companies like FirstEnergy.

The only thing missing from this round of the FirstEnergy Plant Closure game so far is an artificial generation shortage that drives up capacity prices in the region.  Shall we expect that to happen at the next auction? 

How does this keep happening?  PJM and its silly rules and "markets" don't save you any money.

Check out the list of Potomac Edison and Mon Power staff over the last 4 years that was filed in the PSC General Investigation on Friday.

It's pretty obvious that the number of Meter Readers has fallen since the FirstEnergy/Allegheny Energy merger.

Oops, FE.

But check out the bloated number of managers, directors, and "senior" personnel, which seems to be on the rise.

Who do you think is going to keep the lights on here?  Not these "managers."  If FirstEnergy was a bee colony, this hive full of queens and drones would starve to death.

FirstEnergy's continued cuts to operating expenses (more were announced just the other day) have now opened the door for scammers to take advantage of the company's customers.

Read this report by Potomac Edison Customer Danny Lutz:

Danny later reports:

And finally, Danny got tired of waiting for a reply from Meyers:

Nice going, Todd!  The fake email address adds just the right touch to your bumbling attempts to satisfy this customer.

Why aren't Potomac Edison's meter readers wearing uniforms and driving company trucks?  Because those things cost money!  FirstEnergy's cost cutting now allows any person to pretend to be a meter reader, even those with ulterior motives.  How easy would it be to buy a lime green vest, a blinking light and a fake magnetic sign in order to go door-to-door to see who's home... or not?

Danny is not a liar.  FirstEnergy needs to provide a staff of professional meter readers, not unidentified people driving anonymous vehicles and waving electronic devices.  If you have a question about an unidentified person trespassing on your property that you suspect may be a Potomac Edison meter reader (or someone posing as one), do not approach.  Call Todd and ask him to identify the person 724 838 6650.

Don't you just love that headline?  Hopefully the first of many well-deserved slaps upside the head for this crooked company.

Yesterday, the Public Utilities Commission of Ohio (PUCO) ordered that FirstEnergy refund $43.3M to its Ohio distribution affiliates' customers within 60 days.  The PUCO found that Ohio Edison Company, The    Cleveland Electric Illuminating Company, and The    Toledo Edison Company had grossly overpaid for renewable energy credits purchased from their own FirstEnergy Solutions affiliate and then recovered these exorbitant costs from consumers.  In other words, FirstEnergy bought something from itself that was overpriced.

That's the good news.  Now for the bad news.

FirstEnergy has vowed to appeal the decision.  Any refunds due to customers will thus be held until the appeals process has exhausted itself.  FirstEnergy intends to continue to pour millions into avoiding refunds due to struggling electric consumers, and if they are successful, consumers will end up footing the bill for the cost of that too, adding insult to injury.  How long will FirstEnergy deny the consumers their refund?  Maybe forever.

This whole thing smacks of a badly executed bit of play acting by PUCO and FirstEnergy executives.  Everyone knows that FirstEnergy has stacked PUCO with its bought and paid for "yes" men.

This investigation has been going on for years.  A decision was expected last week, but PUCO delayed it a week "to allow time to fine tune an order addressing whether the Akron-based utility overpaid for renewable energy credits and passed those excess costs on to customers."  Fine tuning my eye, the decision was delayed until AFTER FirstEnergy's 2Q Earnings Call on Tuesday so that FirstEnergy's executives wouldn't have to suffer through questions about it, and so it wouldn't drag down FirstEnergy's already disappointing financial results for the quarter.  So, FirstEnergy, where are you going to get the money to pay back this $43.3M that you stole from your customers?  Inquiring minds want to know...

PUCO ruled that all the financial information related to its decision must be kept secret.  This prevents the public from doing its own independent calculation of just how much they were ripped off.  Other parties in the case contend that the theft from consumers actually amounted to more like $130M.

So, if FirstEnergy profited by selling RECs to itself in the amount of $130M, a refund of $43M is a small price to pay.  FirstEnergy still comes out ahead by $87M.  The company has actually been rewarded for stealing from its customers.  What PUCO should really be looking into is FirstEnergy's corporate separation issues.  The company is selling things to itself at outrageous prices because ratepayers are paying the bill.   "Arm's length negotiation" means nothing when Tony's left arm is shaking hands with Tony's right arm, just before plunging both arms into YOUR pocket.

It's well known that PUCO is stacked with bought and paid for FirstEnergy puppets.  This decision and its timing evokes imagination of the negotiations that must have occurred between FirstEnergy and PUCO to set it up to look like FirstEnergy was punished, when it was actually rewarded for stealing from the customers PUCO is sworn to protect.

Read about it here.

Meanwhile, FirstEnergy has attacked Ohio's Renewable Energy and Energy Efficiency standards as "too expensive for consumers."  Maybe someone needs to look into all FirstEnergy's programs to find out why they are "too expensive."  Is FirstEnergy cheating on EE recovery too?

And the bad juju continues to build...