FirstEnergy Corp. (NYSE: FE) subsidiaries Monongahela Power and Potomac Edison, along with the majority of the parties to a proposal involving the coal-fired Harrison Power Station, filed a comprehensive settlement agreement at the Public Service Commission (PSC) of West Virginia.
The settlement agreement includes the companies’ commitments to bring more jobs to the state, and provides financial contributions for economic development, weatherization programs, low-income assistance for paying utility bills, and an education program designed to promote energy efficiency initiatives in West Virginia public schools.
Parties signing the settlement agreement include: the PSC staff; the state Consumer Advocate Division; the West Virginia Energy Users Group; the Utilities Workers Union of America, AFL-CIO and its Local 304; the West Virginia State Building and Construction Trades Council, AFL-CIO; the West Virginia Coal Association; and Local Union 2357 of the International Brotherhood of Electrical Workers, AFL-CIO.
The Consumer Advocate Division had been opposing the plan, saying that the transaction price was too high and that Mon Power would be overcommitting to coal at a time when coal plants are in danger due to new emissions rules.
“We appreciate the support of the parties in reaching this agreement, and look forward to implementing our cost-effective plan to provide our customers with electricity generated in the heart of our service territory,” said Holly Kauffman, president of FirstEnergy’s West Virginia operations, in an Aug. 21 statement. “Having 100 percent ownership of the Harrison Power Station will help shield our customers from unpredictable spot market prices and help provide greater rate stability for years to come.”
Under the terms of the agreement, a typical Mon Power and Potomac Edison residential customer using 1,000 kilowatt-hours (kWH) of electricity per month would be expected to see their current $95.13 monthly bill drop about 1.5% to $93.71.
The parties have requested that the PSC issue a final order approving the settlement agreement and the transaction no later than Aug. 30. If approved as requested, the transaction would likely close in the third quarter or early in the fourth quarter. The Federal Energy Regulatory Commission has already approved the proposed transaction.
Under the proposed plan, Mon Power will purchase about 80% of the Harrison Power Station from FirstEnergy unregulated subsidiary Allegheny Energy Supply, giving it sole ownership of the 1,984-MW supercritical coal plant in Haywood, W. Va. The plan would ensure that Mon Power has adequate resources to meet a slow, but steady, annual load growth rate of 1.4%. As part of the transaction, Mon Power will transfer its approximate 8% interest in the coal-fired Pleasants Power Station to Allegheny Energy Supply.
The proposed transaction represents a $1.1bn investment by Mon Power and benefits customers and the West Virginia economy. Harrison produces electricity with locally mined coal, and the transaction would preserve the “opportunity” to continue to use such coal, sustaining employment levels and helping local economies, FirstEnergy noted. Among the nation’s largest and cleanest coal-fired plants, Harrison is equipped with modern emission controls, including flue gas desulfurization equipment added in the 1990s.
Notable is that FirstEnergy in 2012 was permitting new rail unloading facilities at Harrison that would allow it to bring in Illinois Basin and Powder River Basin coal to the plant, so the word “opportunity” to keep using local coal is an important point. Harrison’s predominant supplier is CONSOL Energy’s (NYSE: CNX) Robinson Run longwall mine, which works the Pittsburgh coal seam and is directly connected to the Harrison plant by a three-mile conveyor belt.
FirstEnergy is a diversified energy company dedicated to safety, reliability and operational excellence. Its 10 electric distribution companies form one of the nation’s largest investor-owned electric systems, serving customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and New York. Its generation subsidiaries control more than 20,000 MW of capacity from a diversified mix of scrubbed coal, non-emitting nuclear, natural gas, hydro, pumped-storage hydro and other renewables.