In this season of giving, FirstEnergy seems intent to give its customers the finger.
Based on Ohio law – SB221, which was passed nearly unanimously in 2008, to be exact – the state’s investor-owned utilities must provide a portion of their electricity from advanced energy sources. By 2025, when the state’s renewable portfolio standard is set to expire, the utilities are required to source at least one-quarter of their electricity from such sources; of this amount, at least half of this total must come from renewable energy sources, like solar and wind.
But recognizing the constraints of quickly ramping up green energy production in a state where it was largely nonexistent before 2009 – along with a wise desire to take advantage of economies of scale – SB221 allowed utilities to buy renewable energy from other providers or to purchase renewable energy credits (RECs) from those providers when sufficient energy is not available. These RECs are an essential component of any renewable energy program.
Unfortunately, FirstEnergy, which rejects the value of energy efficiency/renewable energy and continues to fight aggressively against the mandates, has consistently failed to meet its obligations under the law. Environment Ohio, which grades each of the state’s four major utilities based on how well they abide by the mandates, gave FirstEnergy an F in year 1 and a D- in year 2. FE has come into compliance with the mandates since this point.
But as FE continued to fight the law with one hand and tread water with the other, it decided to purchase a number of RECs to meet its renewable energy mandates. In doing so, however, it drastically manipulated the REC market, allowing it to extract millions of dollars in excessive charges from ratepayers. As Plain Dealer energy reporter John Funk writes:
In a kind of reverse Robin Hood maneuver, FirstEnergy managed to pay the highest known rates for the credits when it bought them in those early years, including some from its affiliate, FirstEnergy Solutions…
[A] management audit by Exeter Associates of Columbia, Md.,found that FES paid up to 15 times more for credits than the Illuminating Co., Ohio Edison and Toledo Edison would have spent had they just paid the fines for not buying the credits.
In fact, the cost of those renewable energy credits was higher than RECs bought anywhere in the country, before or since, the audit noted.
A consultant to the Public Utilities Commission of Ohio (PUCO) calculated that FE’s actions allowed it overcharge customers by at least $100 million. NRDC looked at the numbers and came up with $130 million in overcharges. In August, the PUCO called out FE’s malfeasance and required it to return $43.4 million to ratepayers for its manipulation of the REC market.
But rather than acknowledge its wrong doing, FE has decided it won’t go down without a fight. Instead of returning the money back to its customers, the company has filed an appeal of the PUCO’s ruling to the Ohio Supreme Court. It apparently thinks that, as long as you have the money, two wrongs make a right.
So as we approach Christmas, let’s hear it for FirstEnergy, Ohio’s largest private utility and The Grinch Who Stole $100 Million from Ratepayers.
Please pardon my awful parody of Dr. Seuss:
The company hated green energy, everything in the sector. It had no good reasons, just some straw men and specters. It could be that it was concerned about costs. It could be, perhaps, that it feared about jobs being lost. But I think that the most like reason for its tantrums and fits may have been that the policy didn’t fit its ideological interests.