Pleasants Power plant sale rejected by FERC
PARKERSBURG — The sale of the Pleasants Power Station has been denied.
The Federal Energy Regulatory Commission rejected the proposed purchase of the plant by Monongahela Power Co. and Potomac Edison Co. in a decision issued Friday.
Mon Power’s 2015 Integrated Resource Plan, accepted by the West Virginia Public Service Commission, said Mon Power would have a capacity shortfall beginning in the winter peaking period of 2016 that was projected to exceed 700 MW by 2020 and 850 MW by 2027.
In order to meet its projected capacity and energy needs, Mon Power determined that it would pursue the acquisition of capacity resources.
According to the decision, the commission found the companies that wanted the purchase did not fall within a “safe harbor” for meeting requirements for the transaction to be consistent with the public interest.
”Acquisitions involving affiliates have an inherent potential for discriminatory treatment in favor of the affiliate,” the decision said. ”Affiliate preference when acquiring assets can have serious adverse effects on competition and may therefore not be consistent with the public interest.
”In determining that such acquisitions are consistent with the public interest…the Commission must assure that a public utility’s acquisition of a plant from an affiliate is free from preferential treatment. The public interest requires policies that do not harm the development of vibrant, fully competitive generation markets.”
The applicants stated the transaction qualifies as a “safe harbor” because the West Virginia Public Service Commission regulates all aspects of Mon Power’s retail rates, facilities and service in West Virginia.
”The mere fact that a state commission regulates an applicant and must approve the transaction at issue does not meet the standard established in the Supplemental Policy Statement for the safe harbor,” the decision stated. ”(The) Applicants have not demonstrated that West Virginia has adopted or has in place ring-fencing measures to protect customers against inappropriate cross-subsidization or the encumbrance of utility assets for the benefit of the ‘unregulated’ affiliates.’
”Applicants have provided no evidence that any ratepayer protections regarding cross subsidies are proposed in the proceeding before the West Virginia Commission. In addition, as the Commission stated in the Supplemental Policy Statement, the Commission will recognize the safe harbor absent concerns identified by the Commission or evidence from interveners that there is a cross-subsidy problem based on the particular circumstances presented.”
Constructed between 1978 and 1980, the Pleasants Power Station is located at Willow Island along the Ohio River in Pleasants County, upstream from Parkersburg. It has two 650-megawatt coal-fired turbines that generate 1,300 megawatts of electricity. The plant is currently owned by AE (Allegheny Energy) Supply.
Pleasants Power Station is a nonregulated or competitive electricity generating plant, meaning market forces set its rates. Allegheny Power Supply is FirstEnergy’s nonregulated competitive power plant subsidiary. Mon Power and Potomac Edison are regulated electric companies, meaning the state PSC sets their electric rates.
Monongahela Power Co., Potomac Edison Co. and Allegheny Energy Supply are all subsidiaries of Ohio-based FirstEnergy Corp.
The commission stated in its decision that it appreciated and recognized Mon Power’s legitimate need to address a potential capacity shortfall and to provide for its future capacity and energy needs.
”…it should do so in a way that provides non-affiliate competing suppliers with the same opportunity as an affiliate to meet the utility’s need,” the commission said in its decision.