CHARLESTON, W.Va. -- With a Public Service Commission hearing now less than two weeks away, critics are flooding the commission with arguments against Ohio-based-FirstEnergy's proposal to transfer its Harrison Power Station to a West Virginia subsidiary.
Prepared testimony questioning the deal has been filed by the PSC staff, the agency's consumer advocate, the West Virginia Citizen Action Group, the Sierra Club, and by the West Virginia Energy Users Group, a coalition of industrial power company customers.
Critics say that FirstEnergy is proposing excessive rate increases to fund an overvalued transaction, ignoring the potential gains from better demand-side energy efficiency programs, and locking its Monongahela Power subsidiary into a generation mix that is too narrowly focused on coal.
"The transaction, as currently proposed, is a bad deal for Mon Power customers," concluded West Virginia University law professor James VanNostrand, a utility expert who wrote about the issue on a blog hosted by the College of Law's Center for Energy and Sustainable Development.
"Mon Power would be substantially overpaying for a 40-year old coal plant that is in excess of its capacity needs, and the acquisition would preclude Mon Power from pursuing cheaper alternatives, such as natural gas-fired generation, wholesale market purchases, and energy efficiency," VanNostrand wrote.
The FirstEnergy proposal is one of two such cases pending at the PSC. American Electric Power wants to transfer its John Amos plant near St. Albans, and its Mitchell facility near Moundsville, to its Charleston-based Appalachian Power subsidiary.
The power companies say their proposals will help them deal with upcoming deficits in electricity needed to serve Mon Power customers in Northern West Virginia and Appalachian Power customers in the southern part of the state.
Hearings on the AEP case aren't scheduled until July. But the three-person PSC is set to take up the FirstEnergy case over the Harrison plant starting May 29.
In PSC cases, parties submit written testimony in advance of in-person hearings. FirstEnergy has submitted its initial testimony, and other parties have responded. FirstEnergy's reply testimony is due to the PSC by the end of the day Friday.
"We believe the proposed transaction is good for the state of West Virginia, as it is expected to help ensure reliable power for our West Virginia utility customers for many years to come," Leila Vespoli, FirstEnergy's executive vice president and general counsel, told industry analysts last week. "The proposed transaction is and remains very positive for the West Virginia economy and our customers of our utilities in West Virginia."
A key factor that has drawn much criticism for FirstEnergy's proposal is the company's effort to put the cost of the plant transfer at $1.2 billion, roughly double what critics say the facility is worth.