Costs will be rising… the PPA

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Copyright: Delta Whiskey Creative Commons
If you have missed all the happenings going on at the PUCO over the last few months, FirstEnergy’s PPA (Power Purchase Agreement) has been negotiated with and approved by the PUCO staff. As of this writing, the agreement is expected to be signed by the commissioners early in 2016 (and take effect starting June 1, 2016). The AEP filing approval is not far behind.
The FirstEnergy PPA was originally proposed as a 15-year arrangement as a means to keep viable some of the legacy generation assets (coal and nuclear) with a guaranteed rate of return. The Retail Rate Stability Rider (RRS) of the PPA returns First Energy Solutions generation facilities (Davis Besse, Sammis and their share of OVEC) to a “cost plus” regulation where they are guaranteed to cover the costs with a “reasonable” rate of return.

These plants are not able to compete with low cost natural gas produced electricity in the market. The PUCO accepted a negotiated plan of 8 years to begin in June 2016 and expire in May 2024. As the wholesale market has changed, the utility system(s) had to come up with “innovative” ways to keep operating their facilities and it looks like everyone in the FirstEnergy (and AEP) footprint will see increased distribution costs passed along to them. This ruling, if approved, will have no effect on your ability to participate or secure your power on the open market.

When all the dust settles and no matter the “spin”, this is a shift from de-regulation to, at least for now, partial re-regulation. According to FirstEnergy’s analysis, this program will “save” consumers $590 Million – the Ohio Consumers Council independent study asserts it will cost us $3.9 Billion, this is quite a spread. Now more than ever, we as consumers in Ohio need to make our collective voices heard.

Write/Call/Email – Since the first word of the acronym for the PUCO is Public, as ratepayers within the great state of Ohio, if we collectively express our displeasure with the pending approval of the PPA, maybe we will be heard. Not all that long ago, in the AEP market after a rate plan went into effect, there was a public outcry. The PUCO reversed their decision and had AEP return to their prior rate structure until a new and more “reasonable” plan was adopted. Can history repeat itself?

 

Update: New hearings have been set by an administrative judge at the PUCO regarding FirstEnergy’s PPA to begin on January 14th with no timeline announced for conclusion. The AEP PPA was approved by staff at the PUCO on 12/14/2015 but still has to be signed off by the commissioners.

 

Costs will be rising… the PPA
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