FirstEnergy filing could delay court ruling in ‘bailout’ case

Despite a big win from Ohio regulators last month, FirstEnergy has filed papers asking for still more review. The move could ultimately delay a court ruling on a $200 million per year charge to prop up the company’s credit rating.

At issue is a “distribution modernization rider” that the Public Utilities Commission of Ohio ordered last October to shore up the credit rating of FirstEnergy and its utilities. Appeals from that ruling had already been delayed more than nine months, until the PUCO ruled on August 16 that the charge would stand.

Ohio consumers have been paying for the charge since last winter. More delay won’t work to their advantage.

Dan Doron at the Office of the Ohio Consumers’ Counsel said that agency will most likely appeal the ruling, “but even if the Ohio Supreme Court reverses the PUCO’s allowance of these charges, FirstEnergy consumers may never see a penny of their money returned because of the 1950’s precedent against refunds.”

A ‘bailout’ by different names?

FirstEnergy filed the case in 2014, seeking to guarantee sales for all electricity from certain noncompetitive coal and nuclear plants. The PUCO granted a version of that request in March 2016. Then federal regulators said they would require close scrutiny of the deal.  Rather than allow that close look, FirstEnergy changed its plan to a “virtual power purchase agreement.” Both plans would have cost Ohio customers almost $4 billion.

FirstEnergy’s requests ballooned during the summer of 2016. When the PUCO staff suggested an alternate rider for grid modernization, FirstEnergy said it wanted that, plus the original amount it sought. The company also asked for an additional amount to keep its headquarters in Akron, bringing the price tag for its wish list of charges up to around $13 billion.

Despite the different formats, critics have called the charges a “bailout.”

Last October the PUCO ruled that instead of the original of FirstEnergy’s alternate plans, the company’s utilities could charge customers just over $200 million per year for a “distribution modernization rider.”

The rider was not tied to any specific services or system improvements. Instead, the PUCO’s decision explained, the charge would bolster FirstEnergy’s credit rating to make it easier to get financing at a future time.

Multiple parties promptly asked the regulators to reconsider that decision—a necessary step before appeal to the Ohio Supreme Court.

Last month, the PUCO finally ruled on those motions, setting the stage for appeals.

“There is simply no basis in Ohio law to force utility customers to pay for a slush fund for FirstEnergy Corp and its shareholders,” said Earthjustice’s Shannon Fisk when the decision was announced. Earthjustice represents the Sierra Club in the case. “Given that the PUCO did not fulfill its duty to protect customers from FirstEnergy’s seemingly unending requests for bailouts, we will take our case to the Ohio Supreme Court,” Fisk continued.

What now?

Then on September 15, FirstEnergy’s utilities filed their application “for rehearing of the eighth entry on rehearing.”

Part of the paperwork takes issue with language from last month’s ruling, which directed staff at the PUCO to work with a consultant to review how FirstEnergy uses the money collected under the rider. None of that money is supposed to subsidize noncompetitive power plants owned by FirstEnergy Solutions.

Language in earlier rulings had made clear that commission review of the expenditures would take place in any case. And the PUCO has retained consultants in various other proceedings involving FirstEnergy.

“Our Ohio utilities are fully committed to using the rider DMR funds in a manner that’s consistent with the guidelines set forth by the Commission, so we’re not opposed to a PUCO staff review of these expenses,” said FirstEnergy spokesperson Doug Colafella. “The staff is fully capable of this review, so we simply don’t believe it’s necessary or effective to retain an outside consultant to conduct this review.”

The second argument in FirstEnergy’s papers aims to resurrect an objection that the PUCO should have restored an “adder” provision that was removed last October. The PUCO’s opinion last month indicated that it had reconsidered and rejected FirstEnergy’s claims on that score.

The Supreme Court of Ohio usually won’t consider an appeal from a PUCO ruling until there is a final order. Thus, the court dismissed an earlier appeal in March 2017.

This time, however, the requirement for a final order may already have been met.

FirstEnergy’s latest filing “doesn’t affect a possible appeal mainly because it deals with different issues,” said attorney Trent Dougherty at the Ohio Environmental Council. That organization and others who object to the PUCO’s ruling still have time to decide whether to file appeals.

“FirstEnergy seeks rehearing on a PUCO ruling from last month, which decided some details on how Rider DMR (grid modernization/credit support) will be administered,” explained Dick Munson of the Environmental Defense Fund. “This doesn’t affect our appeal because it deals with different issues.”

If the PUCO denies FirstEnergy’s requests from its Friday filing and the company appeals to the Ohio Supreme Court, it’s possible that the cases could be joined together for decision, Munson and Dougherty noted.

In theory, such a move could add more delay, both said. However, non-criminal court cases often lack a firm timetable for decision in any event.

Meanwhile, customer charges mount.

“Ohioans have already paid some $80 million this year in subsidies to FirstEnergy and, since the state’s rubber-stamp regulators continue to ignore their responsibility to protect customers, that number is set to go up,” Munson noted when the PUCO announced its ruling last month.

And, under existing decisions by the Ohio Supreme Court, customers could be out of luck trying to get that and other money back even if the court rules that the credit support rider is unlawful or unreasonable.

In 2014, for example, the court ruled that AEP could keep $368 million in overcharges to customers, even though the charges had been unlawful.

“FirstEnergy’s charges are another example of why a change in Ohio law is needed for consumer protection,” Doron said. “We support House Bill 247, which would enable Ohioans to obtain refunds of unlawful utility charges and would end the electric security plans that utilities have used for obtaining subsidies.”

Comments are closed.