Mon Power tells PSC its Pleasants plant interim solution may cost more than expected; various groups come out against proposal

Apr. 14—MORGANTOWN — With two hearings set for this coming week regarding Mon Power's possible purchase of the Pleasants Power Station, the company and its FirstEnergy sister Potomac Edison informed the Public Service Commission on Friday that they've learned their proposed interim solution may be costlier and riskier than they originally thought.

The PSC's Consumer Advocate Division, which recommended the Pleasants Purchase, came out late Friday in opposition of the interim solution. "Since the companies' interim proposal provides little if any tangible benefit to West Virginia residential ratepayers, the Consumer Advocate Division cannot support [Mon Power's ] interim solution offered by the companies, and we would oppose the requested surcharge."

In addition, a number of groups have already submitted comments to the PSC opposing the interim solution, in advance of Thursday's public comment hearing. We offer a look at some highlights of comments submitted jointly by West Virginia Citizens Action Group, Solar United Neighbors and Energy Efficient West Virginia.

The companies are considering a recommendation by the PSC's Consumer Advocate Division that Mon Power buy Pleasants and retire Fort Martin, outside Morgantown, for reasons concerning EPA regulations and coal supply.

Pleasants is owned by Texas-based Energy Transition & Environmental Management (ETEM), which is leasing the plant to prior owner Energy Harbor. ETEM plans to demolish the plant and remediate the site but Energy Harbor will keep it open through May 31.

The interim solution involves Mon Power and ETEM entering into an arrangement for up to 12 months to keep Pleasants open while it considers and negotiates the purchase and conducts the regulatory proceedings.

Estimating a cost of $3 million per month to keep the plant ready to reactivate, Mon Power would establish a temporary surcharge to customers to cover the costs — mostly labor — of keeping the plant open. This would add $2.67 per month to a residential bill, $8.44 per month to a commercial bill.

The companies told the PSC on Friday that they have been working on a Letter of Intent (LOI) with ETEM. "During this time, the companies have been made aware of potential additional costs and significant risks that the companies did not anticipate " in the March 31 interim solution proposal.

The companies said ETEM wants reimbursement for maintaining Pleasants in a suitable condition to resume operation upon Mon Power takeover ; costs borne by ETEM after the LOI expires and it prepares the plant for demolition ; and compensation and fees during the period of the LOI if Mon Power doesn't buy Pleasants.

They don't speculate on potential dollar amounts. But they also note that if a reasonable agreement can't be reached they'll notify the PSC and no surcharges would be needed ; but they would factor any costs incurred into a future proceeding.

Emmett Pepper, policy director for Energy Efficient West Virginia commented on the filing, "FirstEnergy was already asking the PSC to write a blank check to buy this plant, with a significant amount of undefined costs being paid using Mon Power and Potomac Edison customers' electric bills. But with this update, the amount of the blank check is going to be way, way bigger.

"With no information about the magnitude or purpose of what is being asked for approval, the only rational outcome is to reject this entire proposal as being a bad deal for the customers who would have to pay these costs, " he said.

Groups' objections Pepper also drafted the 45 pages of comments opposing the interim solution and the Pleasants purchase idea. Here are some highlights.

The companies don't need additional generating capacity through 2030, and have said, "The companies, at this point in time, do not believe operating three power stations as a long-term solution would be in the customers' best interests."

While Pleasants has emissions scrubbing equipment needed to comply with EPA's new Good Neighbor Plan, Energy Harbor owns the plant's 2023 NOx credits, and the plant has no credits allowing it to operate from May through September — somewhat negating CAD's rationale for the purchase.

Pleasants is a merchant power plant — privately owned and selling directly to PJM — and its risks fall on company stockholders. The interim proposal shifts the risks to Mon Power ratepayers. State code 24-2-2 says, "In no case may the rate, toll, or charge be more than the service is reasonably worth, considering the cost of the service." So asking ratepayers to pay the costs of keeping a merchant plant open, with no connection to providing electric service, is illegal.

Also because Pleasants is a merchant plant, it falls outside the PSC's scope of powers to rule on the interim solution. The commission has jurisdiction only over state-created monopoly utilities operating public utility plants — not Pleasants. The PSC's only authority over Pleasants is citing certificates and power purchase agreements. "Because the commission does not have authority to use customers of state-created monopoly utilities to prop up a non-jurisdictional facility, the invited rate hike must be denied."

If FirstEnergy really thinks Pleasants is worth keeping open, its merchant subsidiary Allegheny Energy Supply should buy it back (AES once owned the plant), the comments suggest. "FirstEnergy's refusal to consider that option — or even to carry the plant's costs for a 12-month period — underscores how costly and risky this plant really is."

And, the groups wrote before the companies submitted their Friday letter to PSC, the companies had already estimated that Pleasants-related costs could be much higher — for unanticipated expenses and under-recoveries (costs not met by the proposed surcharge).

Those are the highlights if this filing, and more is to come from other groups as Thursday approaches.

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