In December, Monongahela Power issued an RFP – that’s a Request for Proposals – in which it seeks to purchase an additional 1300 Megawatts (MG) of generating ability.
West Virginians for Energy Freedom, a coalition of environmental, community action, consumer advocates and religious organizations alleges this RFP is an attempt by Mon Power to bail out its parent company First Energy by purchasing First Energy’s coal-fired Pleasant Power Plant. This would transfer that plant’s financial risk from First Energy’s stockholders to Mon Power electricity customers. Cathy Kunkel of West Virginians for Energy Freedom explains.
“First Energy is the parent company of Mon Power and Potomac Edison” said Kunkel. “First energy is based out of Ohio and operates in several states. And right now, one of its out-of-state subsidiaries is throwing its power into a deregulated energy market. It’s not very competitive because natural gas prices are so low and that’s driving down the price of power in competitive markets. And because the Pleasant Power Plant’s not competitive, First Energy has come up with a way to boost shareholder profit. And that is to sell the Pleasant Plant from its deregulated subsidiary to Mon Power. And under the laws that govern West Virginia’s Electricity system, that means that Mon Power and Potomac Edison customers will pay all the costs of the plant plus a guaranteed profit to First Energy, regardless of whether or not the plant is competitive in the wholesale market. Mon Power does not need to buy another power plant at all. The amount of power generated by the power plants Mon Power already owns are more than sufficient to supply projected energy demand of its customers through 2030. So the idea of going out and buying a huge power plant is kind of absurd.”
Kunkel adds that the RFP was narrowly written to pretty much ensure the Pleasant Power Point will be the only electrical generation plant to meet all of the RFP’s restrictions. Kunkel explains.
“It’s fairly obvious that first Energy has been plotting the transfer of the Pleasant Plant for a while” Kunkel explains. “First Energy has talked about it with investors a couple of times in 2016. And then in December, Mon Power issued its Request for Proposal which was fairly transparently designed to put the image of a competitive process and make it look a little less obvious that they were going to go through with what they were saying they were going to do. They issued an RFP for 1300 megawatts of capacity and they restricted it to a relatively small geographic area that includes the 1300 megawatt Pleasant Power Plant and then they layer on some additional restrictions about wanting a plant that could burn West Virginia coal, which again dramatically restricts the scope. And so, at the end of the day the RFP very strongly point’s toward Pleasant, which again is what the parent company said it wants to do all along.”
Kunkel says that shareholders in First Energy will benefit from the sale because they will lose the financial drag of a Pleasant Plant that cannot operate competitively in its current unregulated environment. The sale would also include guaranteed profit payments to First Energy by Mon Power even if the Pleasant Plant loses money for Mon Power.
Kunkel says that Mon Power doesn’t need the extra generation ability. The Mid-Atlantic Power Grid Operator which determines the needs of power companies in 13 states reports that Mon Power has a surplus of generation that will last until at least 2020. But when Mon Power did its own in-house assessment, it showed a need for –you guessed it- an additional 1300 megawatts of electricity generation ability- the exact output of the Pleasant Power Plant.
Kunkel said that even if Mon Power needed more generation, there are other power plants that might have offered to sell to Mon Power – except they can’t meet the tight restrictions Mon Power added into their RFP.
“There are new gas plants that are being built in West Virginia and American Electric Power in Ohio has been has been trying to sell some of its existing generation” Kunkel says. “So there are certainly other resources that are around, and there’s also the wholesale energy market that Mon Power can purchase energy from. There are a lot of alternatives to buying a power plant from their affiliate company.”
West Virginians for Energy Freedom has written a letter to the WV Public Service Commission opposing this sale. You can visit the West Virginians for Energy Freedom’s web site “energyfreedom.org.”
Todd Meyers, a Mon Power Corporate Communications spokesperson agreed to be interviewed by AMR about the RFP, the RFP Process and about Mon Power’s generation needs, but said it is too early to address the specific West Virginians for Energy Freedom’s objections. This is because the received bids on the RFP went directly to, and are still being reviewed by an independent firm –Charles Rivers. That will review the bids and make a recommendation to Mon Power. Until then, the bidders on the RFP are not known even to Mon Power. AMR will air the interview with Todd Meyers in the near future.