COLUMBUS – FirstEnergy Corp this week dug in for a protracted court battle with regulators rather than refund customers $43.4 million they paid for inflated green energy credits years ago.
In a terse, two-page letter filed with the Public Utilities Commission of Ohio, the Akron-based power company gave notice it will ask the Supreme Court of Ohio to block the second PUCO refund order in a fight over renewable energy credits First Energy bought between 2009 and Dec. 31, 2011.
The issues involved in the case are buried in a legal thicket of nearly incomprehensible detail.
The main facts are these: Since 2009, utilities have been required to supply a portion of the electricity they sell with power generated by renewable technologies like wind turbines and solar panels.
They can either generate the green power or buy it from those who do – or buy renewable energy credits called RECs from those same companies if the actual power is unavailable.
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.
The PUCO ruled in August 2013, after reviewing the report of independent auditors it had hired to look into the matter, that FirstEnergy had to refund the $43.4 million.
The 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.
The PUCO in August 2012, a full year after the case began, ordered the company to refund customers by slightly reducing rates, lowering the average residential electric bill by about $5 at the time.
FirstEnergy balked, saying it had done nothing wrong, and that there simply were no cheaper RECs back at the start of the state’s clean energy rules. But a companion audit to the Exeter analysis found that other Ohio power companies had paid more reasonable prices for green power or credits.
The company repeated its position Thursday.
“The Commission’s ruling overlooks the fact that purchasing the renewable energy credits was the only option available to us under Ohio’s clean energy law, which we are required to follow. Our RFP (request for proposals) produced multiple bidders and successfully obtained all of the credits the FirstEnergy Ohio Utilities needed to comply with the mandates,” the company said in a prepared statement.
The Ohio Consumers’ Counsel and a posse of environmental groups have argued just the opposite, that RECs were available. And they were cheaper.
And they have besieged the PUCO with demands that it investigate what they saw as a too-cozy relationship between FirstEnergy and FES. They also have questioned why the company was allowed to review a pre-public version of the Exeter report.
Details such as exact amount paid, and how many credits were supplied by FES as opposed to other bidders were in the Exeter report, but agreeing with FirstEnergy’s arguments that the details were protected, the PUCO months ago sealed the report. The commission staff then filed a redacted version in the public docket, inadvertently not blacking out one reference to FirstEnergy Solutions. That only added gasoline to the fire.
All sides appealed that initial PUCO order, the company saying the refunds were not fair and its protagonists arguing that the PUCO had gone too easy on the company and that it should have, according to the report, ordered the company to refund nearly $130 million in overcharges.
In this week’s ruling, the PUCO threw out all of the appeals, kept the report sealed, said FirstEnergy’s pre-public review of the report was OK and ordered the company to pay up.
The vote, however, was split, with Commissioner Lynn Slaby of Summit County, disagreeing with the four-member majority. He based his position on case law prohibiting refunds of money that power companies have collect through approved rates.
He was referring to a side issue in the brawl, whether the portion of FirstEnergy’s rate devoted to reimbursing the company for the cost of the RECs was merely a rate “rider,” or part of the rate itself. That issue is sure to be in the high court case.
|Wind Watch relies entirely
on User Funding