West Virginia PSC refuses to order FirstEnergy companies to issue power RFPs

Over the objections of factions like independent power producers, the West Virginia Public Service Commission on Oct. 17 refused to order FirstEnergy’s (NYSE: FE) Monongahela Power and Potomac Edison subsidiaries to seek outside bids under certain conditions for new power supply.

Commission staff and the state Consumer Advocate Division (CAD) on Aug. 5 had filed a petition asking that the commission require Monongahela Power (Mon Power) and Potomac Edison (PE) to show cause why they should not be required to file requests for proposals (RFP) for all future capacity and energy requirements above 100 MW.

This case arose out of a stipulated agreement worked out earlier this decade by parties to a case where the two utilities requested approval to buy what they did not already own in terms of a stake in the coal-fired Harrison power plant in northern West Virginia. That stipulated agreement, approved by the commission, said if these companies determine in any annual PJM Interconnection Base Residual Auction (BRA) that their combined capacity obligations for the delivery year covered by the BRA exceed their owned or contracted-for capacity resources for the Delivery Year by 100 MW or more (called the “Capacity Shortfall”), then not later than the end of the calendar year following the BRA, the companies will develop an RFP for capacity resources to address the Capacity Shortfall and submit the RFP to the commission and the parties to the stipulation for their review and comment. The RFP will allow proposals from both supply-side and demand-side resources.

Commission staff and CAD asked that the commission use its regulatory authority, act as the proxy market force, and expeditiously issue an order directing the companies to show cause as to why they are not required to issue a request for purchase for any additional energy above 100 MW. In the alternative, staff and CAD asked that the commission issue a show cause as to if and/or how the companies plan to fulfill the obligations related to the Harrison Joint Stipulation.

On Sept. 7, the FirstEnergy companies filed a response, asserting that:

  • the threshold conditions in the Harrison Joint Stipulation have not been met;
  • mandating one procurement method as prescribed in the staff and CAD petition intrudes on the companies’ right to manage its utility operations; and
  • although RFPs can be helpful in procuring commodities and items, the commission should not tie itself or the utilities it regulates to one particular procurement method.

On Sept. 20, the PJM Power Providers Group and the Electric Power Supply Association, made up of independent power producers, filed a letter in support of the staff and CAD petition, asserting that the commission has the requisite statutory authority to require the issuance of RFPs by the companies and that conducting a broad, competitively-neutral RFP is an industry-wide best practice for securing the most reliable resources in the most cost-efficient manner.

But the commission ruled in the Oct. 17 order: “The conditions described in the Harrison Joint Stipulation have not yet occurred and the Commission is not prepared to accelerate or othenvise modify those terms. The Commission considered the commenters and the arguments submitted by those entities petitioning to intervene. Because of the ruling in this case, the petitions to intervene may be dismissed as moot.” 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.