DOE Should Reject FirstEnergy’s False Narrative

Mark Green
Posted April 3, 2018

Ohio-based utility FirstEnergy’s efforts to land a bailout from consumers have crossed over from the problematic to the absurd.

With the Federal Energy Regulatory Commission (FERC) in January rejecting a bid to alter the electricity marketplace in ways that would favor some generating facilities over others, FirstEnergy last week launched an end-run around FERC, asking U.S. Energy Secretary Rick Perry to basically do what FERC wouldn’t do – bail out up to 85 generating units, all coal and nuclear – claiming there’s an emergency with the reliability of the electricity grid.   

To which the regional power grid operator, PJM Interconnection, quite accurately, responded: What emergency? PJM:

“This is not an issue of reliability. … There is no immediate emergency. Diversity of the fuel supply is important, but the PJM system has adequate power supplies and healthy reserves in operation today, and resources are more diverse than they have ever been. Nothing we have seen to date indicates that an emergency would result from the generator retirements.”

Consumers beware: FirstEnergy’s exertions, to have Perry order PJM to dispatch power from FirstEnergy’s coal and nuclear plants before other generators, ultimately would cost residential and commercial users. API Market Development Director Todd Snitchler:

“FirstEnergy needs to stop misleading the public and government officials about the status of its power plants in Ohio and Pennsylvania. FirstEnergy’s latest attempt to spread a false narrative surrounding the reliability of the electric grid is nothing more than a ruse that will force Main Street consumers to pay higher prices.”

The Wall Street Journal reported:

The cost of emergency federal intervention would indeed fall to consumers. FirstEnergy’s request would force the market’s biggest grid operator, PJM Interconnection LLC, which helps transmit power to homes and businesses from Newark, N.J., to Chicago, to take supply from nuclear and coal-fired plants. It would have to set prices that guarantee profits for those plants, with retail and industrial electricity consumers ultimately picking up the tab.

Again, the word for this is absurd. Snitchler explained that while FirstEnergy has announced it will leave the merchant generation business and retire or deactivate some of its power plans, those actions aren’t scheduled to occur for another two to three years. The company’s Davis-Besse nuclear plant in northwestern Ohio recently was refueled, he said. Snitchler:

“FirstEnergy’s claim that the electric grid would be in immediate danger with these power plant retirements is simply untrue. According to PJM, we have more than enough electricity in the grid to handle these retirements thanks to additional natural gas plants in the region. … For FirstEnergy to cry wolf on the issue of grid reliability is irresponsible and is the company’s latest attempt to force consumers to pay for a bailout. PJM is responsible for the reliability of the grid and if there is an emergency, PJM already has the tools to respond.”

We go back to what we’ve said since some interests started asking the government to intervene on their behalf, claiming deserved preferences whose ultimate cost to consumers was estimated to run in the billions of dollars by the Independent Market Monitor:

Let markets decide. Let them work for the grid and consumers.

Contrary to the claims of the owners of other generating sources, natural gas-fueled power generation has unique attributes that enhance the reliability and resiliency of the power system, including the ability to quickly ramp up or down depending on generation needs. Despite attacks on natural gas, its strong performance as a generating fuel during extreme cold is on the record.

Secretary Perry and the Energy Department should quickly deny FirstEnergy’s unprecedented request. The emergency here is the one FirstEnergy made for itself – leading to the company’s move to seek bankruptcy protection – the result of its own management and investment decisions, that shouldn’t be passed on to consumers.