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PSC OKs Harrison power plant transfer

CHARLESTON, W.Va. -- The state Public Service Commission on Monday paved the way for FirstEnergy to transfer ownership of a Harrison County power plant to its West Virginia subsidiary, but not without a dissent that argued the deal is too narrowly focused on coal-fired generation.

Commission Chairman Michael Albert and Commissioner Jon McKinney voted to approve a settlement agreed to previously by FirstEnergy and by the PSC's staff and Consumer Advocate Division and by the Sierra Club.

But Commissioner Ryan Palmer issued a 10-page dissenting opinion that criticized the settlement, saying it allowed an inflated price for the plant and ignored the electricity industry's move toward more diverse generation portfolios.

"By approving the settlement and the transfer of Harrison, the majority is going 'all in' on coal, at a time when the coal industry is under attack and the general school of thought is to diversify," Palmer wrote.

Palmer continued, "While coal-fired electric generation has been and will continue to be an essential piece of the energy mix for West Virginia and the entire country, it is unreasonable for Mon Power, located in the heart of the Marcellus Shale, to move forward with such an un-diversified portfolio, especially when it failed to conduct a legitimate analysis and balancing of risks associated with potential natural gas generation."

The PSC approved the deal in a 50-page decision announced late Monday in a case that has drawn protests from environmental organizations and consumer groups, and focused attention on issues like energy efficiency and the future of coal-fired power.

Todd Meyers, a spokesman for FirstEnergy, said the company is reviewing the decision.

In a press release, the PSC said its ruling "imposed additional conditions" on the transaction to protect the interest of ratepayers.

Those conditions include a potential refund to ratepayers of part of the transaction costs if federal authorities determine the amount initially allowed was too high, and a limit on recovery of the costs tied to future net profits on off-system sales from Harrison's generation.

FirstEnergy has been seeking PSC approval to sell its Harrison Power Station near Shinnston to subsidiary Mon Power. The company says the move is the best option to deal with deficits in electricity needed to serve Mon Power customers in West Virginia.

Critics say FirstEnergy proposed an overvalued transaction, ignored the potential gains from better demand-side energy efficiency programs and locked the Mon Power subsidiary into a generation mix that is too narrowly focused on coal.

In August, FirstEnergy reached a tentative settlement that, among other things, allowed Mon Power to recover from customers about $858 million of the $1.1 billion it will pay a sister company for the plant.

The West Virginia Citizen Action Group continued to oppose the deal, arguing, among other things, that it would be wrong, and illegal, for commissioners to approve a settlement to allow Mon Power to recover $858 million from customers for the purchase of a plant that has a book value of just $554 million.

Cathy Kunkel, an energy expert for WV-CAG in the case, said that the organization was very disappointed in the ruling and is considering an appeal of the commission's majority decision.

"Commissioner Palmer's dissent lays out very strong arguments," Kunkel said.

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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