W. Virginia Protects Energy Rate Payers. Will Roundhouse Follow Suit?

PNM would have you believe that they deserve a ratepayer bail out for their ‘stranded assets’ but W. Virginia just rejected a FirstEnergy Corp.’s efforts to do precisely what PNM sought with SB 47.There is much to learn from W. Virginia.  PNM would lead you to believe that their request is consistent with relief approved in other states. It is NOT.

Before examining how West Virginia repulsed efforts by their local utility to foist unwarranted costs on ratepayers, two reminders about this weekend.

Update. HB 325 Hearing Saturday 9am, Room 309 And We Have Issues with this Bill Too.  When SB 47 was  before Senate Conservation the Senators who voted SB47 down were particularly concerned with two issues:

  1. The bill undermines PRC authority and consumer protections; and
  2. The bill allows PNM-ownership of replacement power resources without requiring competitive biddings

HB 325 includes both of these problems and we ask that you come out again for Round 2! And as reported in today’s New Mexican we can add two additional flaws: it would allow PNM to continue operating the plants or to sell the plant to another company who would continue to operate the plant:  ” ‘Steve Michel of Western Resource Alliance said while his organization supports relief for communities hurt by coal plant closures, Montoya’s bill, as written, has “serious flaws.’ ” In an email to The New Mexican, Michel said the bill would make it more difficult to shut down coal burners “ ‘because it tips the economic analysis in favor of continued operation.’ ” Also, he said the bill would provide relief to communities “regardless of whether the plant actually closes. Under this bill, a coal plant can continue operating as a merchant plant and there is still an obligation to locate new resources in the county of the closure.” Even PNM opposes this bill, and no environmental organization has supported SB 325.  Click here to read the full New Mexican report. See you at 9 in Room 309.

Chaco Canyon Landscape Preservation.  HM 85 Sunday 10am, Room 309. Click here to get to yesterday morning’s post with contact info, background information and speaking points. Updated Chaco Hearing Times/Locations, below.

HM 85.  Sunday, Feb 11, 10am, Room 309.  House State Government, Indian and Veteran Affairs Committee., Speaking points and contact info for members of this committee are provided at the bottom of this post. The Chaco bill is the only bill on the agenda, so the hearing will begin promptly. Roxanne and I will not be able to attend these hearings as we and others in the Adelante Progressive Caucus of NM are being trained by the head of the CA Progressive Caucus. If you want to hear from the CA Progressive Caucus Chair, see below.

SB 43. Tuesday, Feb 13, 9am. Room 303. House State Government, Indian, and Veterans Affairs. Speaking points and contact information for Committee Members are provided at the end of the post.  

West Virginia Shows Us a Path to Curtailing PNM Greed & Deception

I have been told that New Energy Economy is perhaps a tad strident, uncompromising and principled. When told that, it is somehow viewed as a criticism, an unwillingness to compromise. Well, when negotiating with PNM who makes a habit of doing what a mega corporation whose charge is to maximize profit at the expense of public health, public wealth and public well-being, I want my ally to be uncompromising and principled.  This post describes how in West Virginia advocacy efforts similar to NEE’s have successfully protected ratepayers from efforts by FirstEnergy Corp (their PNM) to seek compensation for retiring antiquated, costly coal firing generation. PNM has turned to the PRC, Supreme Court, and now the legislature (SB 47) seeking the kind of compensation that was sought by FirstEnergy Corp in West Virginian, but WV regulators refused to relent. Let us do the same here in NM. PNM has been

FirstEnergy Corp., a strong supporter of President Donald Trump’s pro-coal agenda, conceded defeat this week in its bid to shift the costs of one of its struggling coal-fired plants onto the backs of customers in West Virginia. Sound familiar?

The company’s decision to withdraw its plan represents yet another loss for owners of coal-fired plants who had hoped a pro-coal president would keep their plants profitable. FirstEnergy’s coal-fired Pleasants power station — located in Willow Island, West Virginia — has been struggling to compete with lower-cost sources of electricity in the unregulated market. To help revive the coal plant, FirstEnergy wanted to force its utility customers, who don’t have a choice of what type of fuel generates their electricity, to subsidize the plant. Sound familiar?

To do this, for more than a year now, the company has been trying to transfer the Pleansants plant —  owned by FirstEnergy’s unregulated subsidiary Allegheny Energy Supply — to Monongahela Power (Mon Power) and Potomac Edison, the company’s regulated utilities in West Virginia. If this scheme had succeeded, its West Virginia customers would have assumed all of the plant’s costs and financial risks, while FirstEnergy and its shareholders would receive a guaranteed revenue stream. Sound familiar?  But on Monday, the company sent a letter to West Virginia regulators informing them that the Pleasants plant transfer agreement “will be terminated.”

If FirstEnergy had succeeded in transferring the plant to its West Virginia utilities, it would have “sucked all the oxygen out of the room in terms of getting clean energy or allowing energy efficiency to be part of the resource mix,” he said in an interview with ThinkProgress.

FirstEnergy was hoping to accomplish on a smaller scale the same goals that the Trump administration had set in its proposal to subsidize the nation’s coal and nuclear plants with guaranteed cost recovery from electricity customers — even if the plants cannot compete in the wholesale power market with lower-cost natural gas and renewable energy generation sources. Under the guise of grid resilience, Energy Secretary Rick Perry released a proposal last fall that would have provided cost recovery for power plants such as coal and nuclear facilities that keep 90 days of fuel onsite. This must be resisted.

Like FirstEnergy’s plant transfer scheme, Trump’s proposal suffered a major defeat at the Federal Energy Regulatory Commission (FERC), an independent agency that regulates the interstate transmission of natural gas, oil, and electricity and oversees the wholesale sale of electricity. In a unanimous vote, the commission on January 8 rejected Perry’s plan to raise consumer energy bills in order to subsidize coal and nuclear power plants. Amazing courage out of the FERC. May our PRC show the same courage.

Rick Perry’s plan to make taxpayers bail out coal and nuclear rejected by federal agency

Given the size of its coal generation fleet, FirstEnergy was one of the biggest supporters of Perry’s failed plan. “We commend Secretary Perry and the Department of Energy for recognizing the importance of a reliable, resilient electric grid for American families and our nation’s economy,” the company said last September after Perry released the proposal.

Overall, FirstEnergy’s subsidiaries control more than 16,000 megawatts of electric generating capacity, enough to serve millions of customers. Fifty-eight percent of the company’s power plants are fueled by coal. Nuclear power makes up 25 percent of its generation portfolio, with hydroelectric, wind, and solar accounting for 12 percent. Even FirstEnergy does a better job of incorporating renewables, as PNM has a pathetic 9% solar and wind in its portfolio. The company’s regulated utility subsidiaries serve about 6 million customers in parts of Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York.

The Pleasants plant has a generation capacity totaling 1,300 megawatts and uses more than 3.4 million tons of coal annually. In 1978, the deadliest construction accident in U.S. history occurred at the plant, when scaffolding on one of the cooling towers collapsed, killing 51 workers.

FirstEnergy and its subsidiaries needed approval from both FERC and the West Virginia commission to move forward with the transfer. At the federal level, FERC delivered a blow to FirstEnergy on January 12 by rejecting its attempt to transfer ownership of the struggling Pleasants plant to its West Virginia utilities. The commission was concerned with the “cross-subsidization” that would occur — using regulated businesses like Mon Power to subsidize or shield unregulated assets like the Pleasants plant from market forces.

But then, on January 26, the West Virginia Public Service Commission approved the sale of the Pleasants plant to Mon Power. In its decision, however, the commission established several conditions aimed at protecting customers from financial and legal risks that FirstEnergy would have to meet if the transfer went forward. After reviewing the commission’s conditions, Mon Power said in its letter that moving forward with the transfer “would result in Mon Power assuming exposure and significant commodity risk” — the very risks FirstEnergy tried to force on customers through its proposal. This is precisely why PNM is seeking passage of SB 47–to avoid responsibility to clean up their own mess.

Numerous groups and customers in West Virginia lined up in opposition to the deal. More than 2,500 people, businesses, and cities sent letters to the West Virginia commission opposing the transfer of the Pleasants plant. The PSC held three public hearings that were packed with opponents of the plan. Precisely the strategy of New Energy Economy, Retake and our allies.

“In the long term, it’s going to be not just a victory for West Virginia ratepayers, but also for creating a window for more clean energy resources and energy efficiency to be a robust part of the energy mix,” Soules said.  Earthjustice attorney Michael Soules worked with clients in West Virginia to fight FirstEnergy’s proposed transfer in ownership of the coal-fired Pleasants power plant. The Pleasants deal would have cost the average residential household approximately $69 each year for the next 15 years, according to expert testimony in the case before the state commission. In total that’s a loss of $470 million that Mon Power and Potomac Edison customers would have been forced to bear.

“This is a major win for the 530,000 Mon Power and Potomac Edison consumers in West Virginia,” Emmett Pepper, executive director of Energy Efficient West Virginia, said Tuesday in a statement. “This deal was bad from the beginning and the extensive evidence presented at the PSC proceeding made clear that the proposed transfer would benefit FirstEnergy and hurt West Virginians struggling to survive in today’s economy.”

To Mariel Nanasi, New Energy Economy Director:  “The history of the WV bill and SB 47 are similar.  PNM wants to be risk free and guarantee that it will recover its investments in the SJGS, FCPP and PV nuclear whether the investments were prudent or not. To me the lesson is beware of Trojan horse(s) because if they had won, it would have been a billion PNM bailout and the senior management would have been running (not walking) to the bank. Instead their stock is falling.”

We are not alone in mistrusting privately owned utility monopolies that are predicated on private profit not public good. It should be instructive to our legislators. Perhaps it is time to break the PNM chains and seek models where our energy generation and distribution are publicly owned and predicated upon public good.  Call me crazy.

In solidarity,

Paul & Roxanne

One thought on “W. Virginia Protects Energy Rate Payers. Will Roundhouse Follow Suit?

  1. You, Paul and Roxanne, are amazing. I can’t imagine how you do so much to help the rest of us understand such complex problems plaguing our country. THANK YOU! Pam Parfitt

    On Sat, Feb 10, 2018 at 6:19 AM, Retake Our Democracy wrote:

    > paulgibson51 posted: “PNM would have you believe that they deserve a > ratepayer bail out for their ‘stranded assets’ but W. Virginia just > rejected a FirstEnergy Corp.’s efforts to do precisely what PNM sought with > SB 47.There is much to learn from W. Virginia. PNM would lead y” >

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