Wednesday May 11, 2016

You might have heard the Ohio utility bailouts got blocked. Last time, we delighted in sharing the news that, thanks to federal regulators stepping in, FirstEnergy and AEP’s subsidy proposals would not be allowed to proceed as planned.

How did the utilities take the decision? Remember when you were a little kid and one of your parents said no to something you wanted, so you went to the other parent with a slightly differently-worded request and hoped the first didn’t find out? Yeah, kind of like that.

Both FirstEnergy and AEP have now revised their requests – specifically to avoid federal review. That said, AEP significantly reduced its ask and pledged to stand by its commitment to develop 900 MW of renewable energy, a worthy goal. FirstEnergy, on the other hand, is still trying to stick it to customers by maintaining the essence of the original proposal. The utility giant wants more money and wants it now, so we’ll find out soon enough whether the Public Utilities Commission of Ohio (PUCO) will usher in the $4 billion rate increases, or say “Boy, bye” to FirstEnergy.

You can always visit EDF’s FirstEnergy website for our newsletter archive and links to the latest news about FirstEnergy’s bailout.

A “Good Conversation” Between Pals: PUCO Chairman Tells FirstEnergy CEO He’s Leaving

When you’re making a major life change like moving out of state or taking a new job, you don’t just text your buddies to let them know. You ring ’em up on the telephone!

Columbus Business First recently reported that Andre Porter, PUCO chairman for the past year, is leaving four years before his term was supposed to end. The official announcement occurred on April 29, but his departure had already been confirmed by – wait for it – Chuck Jones, aka FirstEnergy’s leader. In a recent conference call, Jones mentioned Porter called him to share the news “and they had a good conversation.”

Porter’s year at the helm of the PUCO was largely dominated by the ongoing FirstEnergy bailout request, which the commission unanimously rubberstamped in late March. The article goes on: "‘I think that Chairman Porter showed outstanding leadership during the time he was at the commission,’ Jones said, and he hates to see him go.” Ya think?

FirstEnergy CEO Raking It In

Speaking of Chuck Jones, it’s not his fault he seems out of touch about what a big deal the $4 billion bailout is for everyday customers. You see, his earnings place in him a category above “everyday.” Like, skyscrapers-stacked-atop-one-another above.

In 2015, between cash compensation and equity, Jones’ earnings equaled a whopping $8,947,875. (Pause to think about our own annual salary.)

To be fair, this isn’t out of line with what other major utilities CEOs are pulling in, but still. It must be sunny (or heavily air-conditioned and well-lit) in a rich man’s world.

Morgan Stanley: “New” Plan, Same FERC Problem

As previously noted, the Federal Energy Regulatory Commission (FERC) put the kibosh on FirstEnergy’s grand plans in Ohio. The federal regulators were brought into the mix because Ohio is part of a regional wholesale market, over which FERC has exclusive jurisdiction. The agency rightly declared the bailout to be “abusive,” and said it took advantage of “captive” customers while harming the competitive market.

In response to the ruling, FirstEnergy went, “Hold up – they don’t love us like the PUCO loves us,” and modified its plan to skirt FERC’s oversight.

Despite these wily efforts, Morgan Stanley believes the utility’s updated proposal faces a "real risk of rejection” and a "low probability" of securing FERC approval. That’s because “the scope of what FERC can consider when policing affiliate transactions is ‘broad’,” according to the SNL Energy article.

FirstEnergy can use its creative lawyers and wording to try to avoid federal review, but it’s not getting away that easily.