Last month, we broke word that FirstEnergy was likely to foist the costs of its unprofitable Pleasants Power Station on West Virginians. It would do so by selling the plant to itself.
This wouldn’t just be a re-arranging of corporate assets. By selling the plant off to its West Virginia subsidiary, Mon Power, FirstEnergy can put West Virginians on the hook for the plant’s costs. Mon Power is a regulated monopoly, while FirstEnergy’s current ownership of the Pleasants Power Station is not regulated.
Because it is regulated by the Public Service Commission, Mon Power recovers all of its costs, plus a profit, through rates charged to West Virginia customers. In essence, it is almost impossible for Mon Power to be unprofitable. Mon Power can always go back to the commission to ask for a rate increase.
This is why FirstEnergy wants to make the sale. Once Pleasants Power Station is under Mon Power’s control, the company can cover the plant’s costs through ratepayer subsidies.
FirstEnergy has done this before.
It previously transferred the Harrison Power Station from one of its deregulated subsidiaries to Mon Power. It even did so at an inflated price. Across the boarder in Ohio, FirstEnergy pushed for ratepayers to pay for the costs of several of its coal and nuclear plants.
Several years ago, FirstEnergy doubled down on its investment in unregulated power plants, like Pleasants, through its merger with Allegheny Energy. This turned out to be a poor decision due to low energy prices and flat energy demand. Now, it wants to put force ratepayers to bail out the company’s bad business decisions.