PSC hears arguments for and against Mon Power's interim solution and surcharge regarding possible Pleasants plant purchase

Apr. 21—MORGANTOWN — The state Public Service Commission on Friday heard arguments for and against Mon Power's proposed interim solution to keep Pleasants Power Station in operating condition while it considers the benefits of buying Pleasants and closing Fort Martin outside Morgantown.

Derrick Williamson, representing the West Virginia Energy Users Group, was among those taking a dim view of the proposal, but he correctly summed up the question before the PSC: The question is not whether Mon Power is going to buy Pleasants but if it can charge ratepayers $3 million per month to evaluate the possible purchase.

The evidentiary hearing took place at PSC headquarters in Charleston. The various interested groups summarized their views during opening remarks.

Chris Callas, representing Mon Power and its FirstEnergy sister Potomac Edison, said that the Pleasants acquisition was not its idea—the idea came from the PSC's Consumer Advocate Division, and they simply acquiesced to the suggestion.

Since they first acquiesced, he said, "There have been several complicating factors that have arisen, " including unanticipated costs and new environmental regulations. "There is more to be done ; it is a complex process."

Part of the consideration will be comparing the costs and benefits of operating Pleasants vs. Fort Martin. Pleasants has more advanced environmental capabilities but still has obstacles to overcome. "It's a question of one or the other."

Keeping the plant warm but not producing power is critical to the issue, Callas said. There would be complications in bringing it back to life if it shut down: lack of employees to restart it ; re-firing cold boilers, turbines and transformers ; and possible failure of fans and pumps, as Mon Power previously detailed to the PSC.

The interim solution involves Mon Power and current owner Energy Transition & Environmental Management—which plans to demolish the plant and remediate the site—entering into an arrangement for up to 12 months to keep Pleasants open (but not producing) while Mon Power considers and negotiates the purchase and conducts the regulatory proceedings.

Estimating a cost of $3 million per month—$36 million for the year—to keep the plant ready to reactivate, Mon Power would establish a temporary surcharge to customers to cover the costs of keeping the plant open. This would add $2.67 per month to a residential bill ; $8.44 per month to a commercial bill.

Callas said Friday that Mon Power believes it is appropriate to levy the surcharge on ratepayers because the question of keeping Pleasants working is a public policy and political question ; the company doesn't think shareholders should bear the costs when they didn't seek this move.

Jacob Altmeyer, representing the West Virginia Coal Association, said that coal remains the best option for generating electricity, and provides stability for PJM and the U.S. Premature retirement of non-intermittent baseload creates risk.

The state Legislature has endorsed coal-fired power, he said. "Pleasants is an option that must be maintained." It's more advanced than Fort Martin and choosing to let it close runs the risk of losing both plants, "which would be the worst-case scenario."

Nelson McKown spoke for Longview Power—Fort Martin's neighbor. Longview unsuccessfully attempted to enter into a power purchase agreement with Mon Power, for Mon Power to buy Longview's power at a lower cost and sell for-profit into the PJM grid.

He urged the PSC that if it approves the interim solution, that FirstEnergy also evaluate Fort Martin and other alternatives, including Longview, its solar operation and its combined-cycle gas-fired plant projects moving forward under Longview's sister company Mountain State Clean Energy. It was not clear if he meant a PPA or buying the Mountain State projects outright.

And a review should be conducted by an independent third party, he said.

Emmett Pepper spoke for West Virginia Citizens Action Group, WV Solar United Neighbors and Energy Efficient West Virginia, and their views have been presented in other stories.

West Virginia Energy Users Group is a coalition of various industrial customers across the state that use large amounts of electricity.

The group opposes the interim solution, Williamson said. "There is little benefit for such a surcharge and no sound legal basis." (The legal question arises because Pleasants is a merchant power plant and Mon Power is a regulated public utility, so asking ratepayers to pay the costs of keeping a merchant plant open, with no connection to providing electric service, is illegal.)

Mon Power's ratepayers have already seen a series of hikes, he said: $30 million in January 2022, $141 million in May 2022 and $92 million this past January. And the true amount of this proposal is unknown: $36 million doesn't include various costs associated with the evaluation or new costs Mon Power became aware of on April 14. And Mon Power has two more rate cases on the horizon.

"We have to consider the impact on manufacturing and industry, " he said.

He said PSC has the option of ordering Mon Power to continue its evaluation of the Pleasants purchase, bear the costs, and then submit the actual costs to the PSC later for recovery. The companies can afford it, and while FirstEnergy's shareholders didn't ask for this, neither did the ratepayers.

Mike Becker, speaking for the Sierra Club, echoed Williamson's comments on the surcharge. The process of asking for the money in advance is backwards, he said ; the money is recovered after they know the true costs.

And, he said, previous owner Energy Harbor—which is leasing the plant back from ETEM until it closes on June 1—decided to close it because they can't make a profit off of it, which means it's un-economical.

Robert Williams spoke for the PSC's CAD, which said on April 14 that it opposes the interim solution.

Williams characterized the interim solution as a proposal to have the plant sit idle at ratepayer expense for a year. "We don't think that is a prudent outcome, " and not what they had in mind when they suggested the purchase. There may be a way to reach an arrangement with ETEM to keep the plant in operating condition without the surcharge.

After opening statements, witnesses were called to the stand and FirstEnergy's Mark Valach, who directed Pleasants from 2014-19, offered some additional details on Mon Power's behalf. "The plant may have value to the customers of Mon Power ; we don't know for sure, " he said.

The ability to realize benefits is at risk if the plant goes cold. "It's a decision that should not be rushed. ... There will certainly need to be equipment upgrades to address the environmental concerns." And other improvements may be needed.

He said the interim solution could last up to a year, but they hope to have an answer sooner. One problem will be obtaining Federal Energy Regulatory Commission approval of Mon Power taking the plant over, which could run nine months or longer. FERC approval is required for any entity other than Energy Harbor to operate it.

They've had discussions with other potential buyers, he said, including one eyeing it for hydrogen generation, but none of those discussions have come to bear on the current proposal. "We do believe there is value in analyzing this plant to the benefit of our customers in Mon Power. That benefit will certainly evaporate if that plant is not able to be restarted or in worst case demolished."

Mon Power needs an answer from the PSC by April 25, he said. The plant will close on June 1 and Energy Harbor would have to notify PJM if it decides to keep it open beyond that date—Energy Harbor wants an answer by May 1. The surcharge would go into effect when the letter of intent with ETEM is agreed to.

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