The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content sharing agreement.
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 offload factories, FirstEnergy funded what federal prosecutors said was probably the biggest bribery and money laundering scandal in Ohio history.
After the scandal erupted openly in 2020, FirstEnergy fired its top management, signed a 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 a seven-week trial that ended earlier this month with racketeering convictions of former Ohio House Speaker 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 handed over the loss-making coal-fired power plant to Energy Transition & Environmental Management, which is preparing it. 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 plant running for many, many years to come and running like a coal plant,” WOWK quoted Justice last month. “We need it.”
Earlier this year, the state regulator, the West Virginia Public Service Commission, ordered FirstEnergy’s subsidiaries to submit a report on the possibility of purchasing the Pleasant plant by March 31st. It is reported by the Parkersburg News and Sentinel.
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 was “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 3,160 MW of existing coal-fired generation capacity will “gut” FirstEnergy’s goal of cutting greenhouse gas emissions by 30% by 2030, environmental law group Earthjustice said.
Such a failure would be especially discouraging in light of the horrific report released on Monday by the International Panel on Climate Change. It states that the window to keep future generations from being cursed and living a nightmare is closing 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 Form 10-K section 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 particularly 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 can leach into groundwater.
“Shifting all of this responsibility to dependent customers of their (regulated) utilities could potentially be financially beneficial for FirstEnergy Corp,” Soles said.