The coal plants helped cause a bribery scandal. Now FirstEnergy can buy it back
Akron-based FirstEnergy may be poised to boost its coal-fired generation capacity by 40% by buying a West Virginia plant it owned less than four years ago and spun off in a massive racketeering scandal.
The reason the company paid out more than $60 million between 2017 and 2020 to secure a $1.3 billion bailout was pretty simple: it bankrupted unprofitable nuclear and coal-fired power plants, and executives thought huge bailout subsidies will make the new independent company attractive to buyers.
In its desperation to unload the plants, FirstEnergy funded what federal prosecutors said was likely the largest bribery and money laundering scandal in Ohio history.
After the scandal erupted in 2020, FirstEnergy fired its top managers, signed deferred prosecution agreement, and paid a $230 million fine. As if this reputational damage wasn’t enough, the company’s name was constantly dragged into the mud of the seven-week legal battle that ended earlier this month. racketeering convictions former Speaker of the Ohio House of Representatives Larry Householder and State Republican Party Chairman Matthew Borges.
But after all this, FirstEnergy may be ready to buy out one of the coal-fired plants it went to great lengths to get rid of.
The Pleasants power plant is on the West Virginia side of the Ohio River southeast of Marietta. FirstEnergy placed it in a subsidiary of FirstEnergy Solutions right after the corrupt bailout was accepted in 2019. The subsidiary emerged from bankruptcy as Energy Harbor in February 2020. The new independent company then took over the unprofitable coal-fired power plant. Energy Transition & Environmental Management, which is about to close.
Pleasants is scheduled to close by June, but West Virginia Gov. Jim Justice and members of the West Virginia Legislature are pushing for FirstEnergy to buy it out and make it part of Monongahela Power’s or Potomac Edison’s regulated subsidiaries.
Political efforts appear to be focused on protecting coal jobs at a time when coal cannot compete with natural gas and renewables. But Justice said he wants to save the plant and presumably make consumers pay for it.
“The Senate, the House of Representatives, and I are going to do everything in our power to make this a reality, to keep this power plant running for many, many years to come and running like a coal-fired power plant.” VAUK quoted Justice as saying last month. “We need it.”
Earlier this year, the state regulator, the West Virginia Public Service Commission, ordered FirstEnergy subsidiaries to submit Pleasants feasibility report object by March 31st. It was part of an order granting the two companies a $92 million rate hike, Parkersburg News and Sentinel reported.
According to some observers, this would not be a very good move for business. In an analysis released last September, the Institute for Energy Economics and Financial Analysis said the offer to sell the 44-year-old Pleasants plant is “high risk, low reward“.
“For years, its owners have threatened to sell or shut down the economically struggling plant and have now set an exit date for June 2023,” the report says. “But they have left the door open to sell the facility, a controversial possibility that is likely to be repeated over and over across the region as the current owners seek to shed their aging, increasingly uncompetitive coal-fired generating capacity.”
So what would interest FirstEnergy in re-acquiring such an obvious white elephant — apart from the $92 million that was awarded to its subsidiaries at the same time as the same government agency that ordered the companies to consider buying?
Of course, this would not be in line with the company’s strategy after the Ohio bailout scandal.
First, adding 1,300 MW to the existing 3,160 MW coal-fired generation capacity, “gut” FirstEnergy’s goal of reducing greenhouse gas emissions by 30% by 2030, environmental law group Earthjustice said.
Such a failure would be especially discouraging in light of terrible report released on Monday by the International Panel on Climate Change. It said that a window to save future generations from a curse and a nightmarish existence, closes even faster than expected.
In addition to melting sea ice and more severe storms and more, it says: “Across all regions, an increase in extreme heat events has resulted in human deaths and illnesses. The emergence of climate-related food and waterborne diseases and the incidence of vector-borne diseases have increased.”
And for those concerned about refugees, the suggestion was: “Extreme climatic and weather conditions are increasingly driving population displacement in Africa, Asia, North America, Central and South America…”
Last week, FirstEnergy sent out a list of questions, including a question about how the addition of a coal-fired power plant would affect meeting environmental obligations. But it only gave one answer.
“By order of the West Virginia Public Service Commission (Monongahela), Power is currently evaluating the purchase of the Pleasants power plant,” spokeswoman Hannah Catlett said in an email. “We plan to report our findings to the commission in the coming weeks.”
Also dubious for FirstEnergy’s purchase of the Pleasants plant is that the company has repeatedly mentioned the risks associated with owning coal-fired power plants in SEC filings.
“We have coal-fired generating capacity, which puts us at risk due to coal (greenhouse gas) and (coal ash) regulations and could result in increased costs or significant resources being required to defend against allegations of infringement,” it says. in the message. heading to the section Form 10-K for the year ended 31 December.
Michael Soules, senior associate at Earthjustice, said FirstEnergy may be interested in managing the risk of purchasing Pleasants and placing it in regulated utilities such as Monongahela or Potomac Edison. Unlike so-called “merchant” businesses, where the losses are borne by shareholders, taxpayers cover them for regulated utilities.
“The risks associated with owning yet another large coal-fired power plant could be reduced if they can pass all those costs on to their utility taxpayers in West Virginia,” Soles said. “Maybe we thought, ‘Well, maybe we have a piggy bank in the form of Monongahela Power Company and Potomac Edison clients.’
This may be especially true of any FirstEnergy liability that may have been associated with coal ash, the residue from burned coal that is often landfilled where toxins such as mercury, cadmium and arsenic may enter groundwater.
“Shifting all of this responsibility to dependent customers of their (regulated) utilities could potentially be financially beneficial for FirstEnergy Corp,” Soles said.
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