Legal & Regulatory

Amid “Corporate Welfare” Flak, FirstEnergy Gets Davis-Besse Extension

FirstEnergy Corp., which may enter into a settlement with Ohio to safeguard the future of its Davis-Besse nuclear plant—a deal critics have blasted as “corporate welfare”—just got the Nuclear Regulatory Commission’s permission to operate the 1978-built reactor until 2037.

The 20-year license extension marks a milestone for Akron-headquartered FirstEnergy, which has warned it might have to shut down the single-unit plant in Oak Harbor, Ohio, that has been rendered unprofitable by low natural gas prices. FirstEnergy also operates the 1987-built Perry Nuclear Power Plant in Ohio and the two-unit Beaver Valley Power Station in Pennsylvania that started operations in 1976.

The company has told the Public Utilities Commission of Ohio (PUCO) that it needs income guarantees for Davis-Besse as well as its W.H. Sammis coal-fired power plant to keep them profitable. Last week, the company reached a proposed settlement with PUCO staff to secure income guarantees for eight years (from June 2016 to May 2024) by charging its two million Ohio customers an extra $400 million over the next two and a half years. The settlement commits Ohio customers to buy all the power generated by Davis-Besse and W.H. Sammis at whatever cost.

In return, FirstEnergy agreed to promote future fuel source diversity, including declaring a “goal” to reduce carbon dioxide emissions from FirstEnergy’s fleet by at least 90% below 2005 levels by 2045, even if the federal Clean Power Plan is vacated.

FirstEnergy also agreed to boost its renewable resources by 100 MW, to modernize its grid throughout its service territories, and to evaluate energy efficiency and investments in battery resources.

While PUCO has no set timetable to approve the plan, the company has asked staff to clear it by February 2016, just months before its current rate plan expires in May 2016.

Critics have lambasted the measure, however. In a Dec. 1 statement, national trade association the Electric Power Supply Association (EPSA) and the PJM Power Providers Group (P3) called PUCO’s support for the proposal a “massive ratepayer bailout” for FirstEnergy.

“Indeed, the settlement is corporate welfare at its worst. For the sake of Ohio’s future, the Commission must reject it,” said P3 President Glen Thomas.

EPSA added that the proposal discriminates against its members and undermines federally regulated wholesale power markets.

The Sierra Club, too, strongly opposes the plan, withdrawing from closed-door negotiations on Nov. 25 and vowing to fight the plan in court.

“The expedited discussion with FirstEnergy and the PUCO staff amounted to nothing more than being asked to agree to a pre-negotiated, back-room deal that would harm Ohio’s businesses and homeowners,” said Dan Sawmiller, senior representative for the Sierra Club’s Ohio Beyond Coal Campaign.

The Sierra Club, meanwhile, is also strongly opposed to the continued operation of Davis-Besse, which it says has a “horrendous safety record.” Given the availability of “cheaper and safer clean energy alternatives, there’s no doubt that the plan should be transitioned into retirement,” Jen Miller, director of the Ohio Sierra Club said in a Dec. 8 statement.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)




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