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    FirstEnergy subsidiaries reach settlement for rate hike proposal to keep Fort Martin, Harrison power stations operating

    August 11, 2022 - Mike Tony, The Charleston Gazette-Mail, W.Va.


      Aug. 11—FirstEnergy's West Virginia-serving subsidiaries have settled with intervenors in their case seeking rate increases from state regulators to cover wastewater upgrades federally required for the two coal-fired plants to meet a 2025 compliance deadline.

      Mon Power and Potomac Edison filed a settlement agreement Tuesday with the state Public Service Commission reporting a settlement agreement under which the companies would impose rate increases from 2024 through 2026.

      If approved by the commission, the rate increases of 0.4% in 2024, 1.3% in 2025 and 1.8% in 2026 would be applied to a surcharge for compliance with regulations based on the performance and costs of demonstrated wastewater control and treatment technologies.

      The companies filed a request Dec. 17 requesting cost recovery for $142 million in environmental upgrades federally required to keep the Fort Martin Power Station in Maidsville and the Harrison Power Station in Haywood operating compliance deadline until their anticipated retirement dates of 2035 and 2040, respectively.

      The companies' capital investment is $142 million, and the total revenue requirement would start at roughly $6.5 million in 2024 and increase up to approximately $26 million in 2026, FirstEnergy spokesman Will Boye said.

      "These projects are necessary to comply with environmental laws and for the plants to continue operating in a cleaner way into the next decade for the benefit of West Virginia customers," Boye said in an email.

      Boye said FirstEnergy would evaluate environmental regulations to ensure the plants remain in compliance throughout their remaining lifespans.

      Mon Power and Potomac Edison filed the rate hike request in December. An evidentiary hearing in the case was scheduled to be held Wednesday, but the commission canceled it after the agreement was filed.

      Commission spokeswoman Susan Small declined comment on the settlement agreement.

      The companies settled with the commission's staff, the Consumer Advocate Division, the West Virginia Energy Users Group (a group of large industrial users), the West Virginia Coal Association and Longview Power LLC.

      The Sierra Club, the proceeding's only other party, did not join the settlement.

      Karan May, central Appalachia senior campaign representative with the Sierra Club, said her organization opted not to sign on because it disagrees with the expenditures at a time when she said utilities should be transitioning to renewables or programs aimed at lowering electricity demand.

      "Mon Power's continued reliance on needlessly expensive coal plants will only further already burdensome electricity bills in a time of economic crisis and uncertainty," May said in an email.

      May said Mon Power should focus on a "just transition" to clean energy alternatives as well as increased energy efficiency programs to help lower customer costs.

      The Fort Martin and Harrison power stations emitted a combined 16.7 million tons of carbon dioxide in 2020, according to U.S. Energy Information Administration data.

      A Clean Air Task Force analysis of emissions data derived from a federal screening model has estimated health impacts of 178 deaths and more than 1,800 asthma attacks per year from the two plants combined.

      In November 2020, FirstEnergy pledged to achieve carbon neutrality by 2050.

      Under the agreement, Mon Power and Potomac Edison will track revenues from the surcharge and project costs separately so that they can be compared to actual project costs. The companies will make an annual surcharge reconciliation filing requesting commission approval of rates that reflect the over-recovery or under-recovery of project costs so that only "actual and prudent" costs incurred are paid by customers.

      Robert Williams, director of the Consumer Advocate Division, touted that provision in a defense of the agreement.

      "While no rate increase is ever welcome, the Consumer Advocate Division expects utility companies to make prudent business decisions which make economic sense for the utility and its ratepayers," Williams said in an email.

      The Consumer Advocate Division is an independent arm of the Public Service Commission.

      Williams predicted that closing the plants due to noncompliance with the 2025 compliance deadline for wastewater control and treatment upgrades would have a much larger impact on rates due to accelerated asset depreciation than the proposed rate hike coupled with environmental investments.

      "Market conditions will continue to fluctuate and change," Williams said. "But for the foreseeable future, it makes economic sense to keep these plants up and running, as opposed to permanently shutting them down."

      The companies cited estimates published by the West Virginia University Bureau of Business and Economic Research that the two plants generate local and state tax revenues totaling more than $45 million.

      West Virginia Coal Association president Chris Hamilton called the settlement a "win-win for all parties," especially residents within FirstEnergy's distribution region.

      "Kudos to FirstEnergy's commitment to our state," Hamilton said in an email.

      The deadline for the commission to rule on the case is Sept. 13.

      Mike Tony covers energy and the environment. He can be reached

      at 304-348-1236 or mtony@hdmediallc.com. Follow

      @Mike__Tony on Twitter.


      (c)2022 The Charleston Gazette (Charleston, W.Va.)

      Visit The Charleston Gazette (Charleston, W.Va.) at www.wvgazette.com

      Distributed by Tribune Content Agency, LLC.


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