MORGANTOWN — Mon Power may continue pursuing a letter of intent with Energy Transition & Environmental Management to keep the Pleasants Power Station open in order to continue evaluating the possible purchase of the plant, according to a Public Service Commission order.
A possible customer surcharge to cover the cost of keeping the plant open during the evaluation will depend upon the two companies agreeing to the LOI and the PSC approving it, the order says.
PSC issued the order Monday following a public comment hearing in the case on Thursday and an evidentiary hearing on Friday.
Mon Power and its FirstEnergy sister Potomac Edison proposed an interim solution to keep Pleasants in operating condition while it considers the benefits of buying Pleasants and closing Fort Martin outside Morgantown. The interim solution involves Mon Power and current owner ETEM — which plans to demolish the plant and remediate the site — entering into an arrangement for up to 12 months to keep Pleasants open (but not producing) while Mon Power considers and negotiates the purchase and conducts the regulatory proceedings.
Estimating a cost of $3 million per month — $36 million for the year — to keep the plant ready to reactivate, Mon Power would establish a temporary surcharge to customers to cover the costs of keeping the plant open. This would add $2.67 per month to a residential bill and $8.44 per month to a commercial bill. The surcharge could continue beyond 12 months if the companies seek and obtain PSC approval.
In its 14-page order, the PSC discusses its reasoning for its decision. It notes that plant operator Energy Harbor has until May 1 to rescind its shut-down notice to PJM, the regional energy grid.
It cites the Legislature’s statements that coal-fired power plants should continue to provide base-load generating capacity, and two resolutions urging Mon Power and its FirstEnergy sister Potomac Edison to buy the plant in order to keep the power flowing, retain the jobs and maintain the economic benefits.
The PSC noted that company witnesses explained potential environmental regulation hurdles, “but also were convincing in their observations that there may be value for the companies’ customers from having Pleasants in their power supply portfolio.”
The PSC observes that while some have said PJM does not need the generating capacity, PJM itself has said, “The retirement of thermal resources, and likelihood of few, if any, new thermal resources is a major problem in the absence of massive build-up of storage capacity, which is highly unlikely.”
A PJM report says the growth rate of electricity demand is likely to continue; thermal generators are retiring at a rapid pace due to government and private sector policies as well as economics and retirements are at risk of outpacing the construction of new resources; and PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources, meaning it would need multiple megawatts of these resources to replace 1 MW of thermal generation.
PJM said, “Myopic opposition first to base-load coal-fired power plants and, more recently, to any fossil-fuel thermal power plant, has led to an electricity system that is less reliable, less resilient and that requires multiples of new intermittent solar and wind capacity to replace retiring thermal generation capacity due to the greatly reduced load-serving capability of intermittent resources that are not always available when needed.
“We recognize that because of the interconnected electric transmission system we cannot easily protect West Virginia against poor reliability choices throughout the interconnected system,” PJM said.
Given all that, the PSC said, “It would be imprudent for the companies to sit idly by while a large base-load thermal power plant in their West Virginia service area, and that they once owned a portion of, is demolished without taking all steps possible to keep the plant operative.”
The interim solution is reasonable, PSC said, because it requires the companies to further evaluate the operational ability of the plant; requires a reasonable proposal to compensate the owner for its costs to keep the plant in operating condition; requires ratepayers to pay the costs necessary to keep the plant in operating condition for a limited period of time controllable by the PSC; and provides that costs will not be included in rates unless and until it approves an LOI.
If a surcharge goes into effect, the PSC said, and then circumstances arise where these costs are no longer necessary, the costs and surcharge will end upon completion of the cost obligations of the LOI, and costs will be subject to final true-up for collection from, or refund to, customers.
Mon Power and Potomac Edison have 30 days from Monday to file a status report on their negotiations.
Asked for comments on the order, the companies said, they will continue their evaluation and begin LOI negotiations. If the agreement is in the best interest of customers, they will seek PSC approval and provide an opportunity for stakeholders to review. A surcharge won’t be established until it is approved by the PSC. If the companies can’t reach an agreement with ETEM they will file an update with the PSC.
West Virginians for Energy Freedom, which has opposed the interim solution and plant purchase, commented, “We are glad that there is no immediate rate impact to ratepayers. But we are concerned that these proposed charges could potentially be forced onto ratepayers in the future.
“Part of the order seemed to suggest that it might somehow be appropriate for West Virginia ratepayers to be forced to pay higher bills to ensure generation reliability in other states in the PJM grid,” WVEF aid. “It is not fair to West Virginia families with high energy burdens, many of whom are on fixed incomes, to pay for that. It’s also not fair to small businesses who are not politically connected enough to lobby for a special tax break for their businesses, like the Pleasants plant did recently. West Virginians’ reliability challenges will not be fixed by another power plant and PJM has already specifically said that Pleasants can retire without impacting grid reliability.
“It is imperative that the public have an opportunity to fully vet this agreement between these two out-of-state companies, since it will be West Virginians who will bear the costs of it,” WVEF said. “There should be multiple public hearings held near where the affected people actually live and the ability to develop a full record showing whether or not this is a good deal for the people who will have to pay it.”
TWEET David Beard @dbeardtdp
EMAIL dbeard@dominionpost.com
