Could this be a connect-the-dots situation? On April 27, the Cleveland Plain Dealer reported that Andre Porter, chairman of the Public Utilities Commission of Ohio, is stepping down, taking a job with an unnamed regional electric transmission organization. Electricity Daily speculated that the job might be with the PJM Interconnection.
On April 27, the Federal Energy Regulatory Commission blocked a plan, backed by Porter’s PUCO, to effectively subsidize coal and nuclear plants of Columbus-based AEP Ohio, and First Energy of Akron, the state’s two large investor-owned utilities, which have been unable to compete in the PJM wholesale market. I wrote a blog at the time of the PUCO action at the end of March, calling the move “no-fault capitalism” and suggesting that FERC was likely to look askance at the deal.
Porter at the time said, “These orders today are as much about the future modernized grid as they are about the challenges today,” a laughable statement. FERC apparently saw it in much the same terms. My colleague Tom Overton wrote in POWER, “The ruling represents the second major blow this month against state efforts to support generating plants that have been unable to compete in interstate power markets,” citing the U.S. Supreme Court ruling in Hughes v. Talen Energy Marketing, killing a plan by Maryland regulators to subsidize generators bidding into the PJM capacity market.
Porter ducked out of PUCO meeting room after the vote and has not, as best I can tell, spoken to reporters. He skedaddled from the PUCO just a month after the controversial, and likely doomed from the start, decision. The Plain Dealer, reporting his departure for an “out of state” RTO, called Porter “the wunderkind administrator of Gov. John Kasich’s administration.” Kasich appointed him to the PUCO in 2011 and, in 2013, named Porter to head the Ohio Department of Commerce. In 2015, he moved Porter back to the PUCO as chairman, with a term expiring in 2020. Electricity Daily noted that Porter is “the third PUC chairman in the last three years in Gov. John Kasich’s administration.”
A number of stakeholders, including the Electric Power Supply Association, representing non-utility generators, immediately asked FERC to overturn the Ohio ruling. The federal agency responded in bureaucratic warp speed, issuing its order 30-days later.
FERC’s action rescinded waivers the federal agency had given AEP and First Energy allowing them to buy power from their affiliated generation units. The new ruling requires the companies to come back to FERC to make the case for why their proposal doesn’t harm consumers to the benefit of the utilities’ shareholders. In FERC-speak, they must demonstrate why the rates that result are “just and reasonable.” They are not on the face of it.
AEP CEO Nick Akins responded quickly, and dismissively, to the FERC order. Speaking to investment analysts the day after FERC pulled the plug on the Ohio deal, Akins said he was “not interested in participating in a drawn-out FERC review process” and blasted the “unfortunate intrusion by FERC into Ohio’s ability to define its own long-term electricity supply and protect customers and the state economy from electricity price spikes and market volatility.”
AEP has indicated it may sell off its generation, which must operate at arms’ length from the parent to participate in federally-regulated wholesale markets under the deregulated wholesale market. AEP indicated it might also look to state legislation to reverse the legislation from the 1990s that deregulated Ohio electric markets.
FirstEnergy, financially weaker than the larger AEP system, likely would join AEP in an effort to re-regulate the Ohio market legislatively, according to UBS electric utility analyst Julien Dumoulin-Smith. SNL Energy quoted him, “Bottom line, ultimate FERC rejection is not the end of the line as re-regulation would presumably remove FERC review entirely, with an exit from wholesale market oversight altogether.”
First Energy’s long-troubled 900-MW Davis-Besse nuclear plant is one the generating units unable to profit in the PJM wholesale market. The 1970s plant last December got a 20-year Nuclear Regulatory Commission license extension to 2037.