Consumers weigh in on possible Pleasants Power sale

Jun 6, 2023

CHARLESTON — With the sale of the Pleasants Power Plant possible, an organization representing commercial and industrial electric customers in West Virginia believe it is in appropriate for state regulators to consider a possible plan by two electric companies to keep the plant functioning at the expenses of ratepayers.

But the state Public Service Commission's original April order allowing negotiations between Akron-based FirstEnergy Corp. subsidiaries Monongahela Power Co. and Potomac Edison Co. with Texas-based Energy Transition and Environmental Management — the owners of Pleasants Power — to operate the plant for a 12-month period stands after environmental and consumer advocate groups petitioned the PSC to reconsider its order.

The West Virginia Energy Users Group filed a response Friday with the PSC to a status report filed May 24 by Mon Power/Potomac Edison in their ongoing negotiations towards a letter of intent with ETEM to maintain Pleasants Power for 12 months while the electric companies consider a purchase of the plant.

In that May 24 status report, Mon Power/Potomac Edison revealed that ETEM was also in talks with California-based Omnis Fuel Technologies to purchase Pleasants Power to produce hydrogen instead of generating electricity from burning coal. Hydrogen is a clean fuel that can be used for industrial production, heavy transportations, and energy fuel cells.

Energy Harbor, the former owners of Pleasants Power, has been leasing the plant from ETEM with the plant slated to shut down by Friday. But in a letter last Wednesday to regional wholesale energy transmission company PJM Interconnection, Energy Harbor requested a change from Pleasants Power's status from "deactivated" to "mothballed" through July 31.

According to the Mon Power/Potomac Edison PSC filing, a purchase agreement between ETEM and Omnis would need to be signed by June 10, and the transaction closed by July 31. Sources close to the negotiations believe a letter of intent between ETEM and Omnis is likely, declining to be identified due to the sensitivity of the ongoing negotiations.

While the negotiations between ETEM and Omnis continue, Mon Power/Potomac Edison is continuing negotiations with ETEM toward a letter of intent to lease the plant, expecting to submit the deal to the PSC for approval by mid-June. While Pleasants Power would not be producing coal-fired electricity, Mon Power/Potomac Edison would maintain the plant from June to May 2024 and keep the plant's 154 workers employed while it continues to explore buying the plant.

Mon Power/Potomac Edison is seeking a temporary surcharge on its residential, commercial and industrial customers in North Central West Virginia and the Eastern Panhandle to cover the costs of leasing and maintaining Pleasants Power. The companies originally sought a $36 million temporary surcharge, though the companies have since admitted the costs could increase.

Carries Grundman, an attorney representing WVEUG, said parties in the PSC case only became aware of the negotiations between ETEM and Omnis recently, and the discussions were never brought up in previous PSC filings or the evidentiary hearing to consider Mon Power/Potomac Edison's plan to operate Pleasants Power. Grundman said the new information calls into question the PSC's order encouraging Mon Power/Potomac Edison and ETEM to continue negotiations.

"This new disclosure fundamentally alters the context for the commission's April 24 Order granting the companies’ requested interim solution and conditionally authorizing a ratepayer surcharge of $3 million per month subject to commission approval of a subsequently negotiated letter of intent … with ETEM," Grundman wrote. "Indeed, the transaction currently being contemplated by ETEM and Omnis … calls into question the necessity and propriety of the relief granted by the commission's April 24 Order …"

WVEUG is concerned that if Mon Power/Potomac Edison finalizes a letter of intent with ETEM, it would possibly put ratepayers on the hook for costs for maintaining Pleasants Power — even though the plant would produce no electricity — through June or longer while ETEM and Omnis continue their negotiations.

"It would be inappropriate for the companies — and their ratepayers — to subsidize the costs to maintain Pleasants during this timeframe when a private third-party is contemplating the purchase of Pleasants for purposes of producing energy," Grundman wrote. "The commission was forced to act with urgency when it issued its April 24 Order because the companies claimed urgent action was needed. It is now evident that arguably was not the case because ETEM was actively negotiating a deal with Omnis."

WVEUG represents multiple commercial and industrial electricity consumers, including Argos LLC, the Chemours Co. LLC, Cleveland-Cliffs Steel LLC, Marathon Petroleum Co. LP (MarkWest), Messer LLC, ND Fairmont LLC, Novelis Fairmont-WV, Quad, Rockwool, U.S. Silica Co., Weyerhaeuser Company NR and Zoetis LLC.

In an order issued Thursday, the PSC denied a May 4 petition from West Virginia Citizens Action Group, Solar United Neighbors, and Energy Efficient West Virginia requesting the PSC to reconsider its April 24 ordering encouraging negotiations between Mon Power/Potomac Edison and ETEM to continue.

The groups argued that the PSC exceeded its statutory authority in issuing the order and relied on reports not submitted into evidence in the case. WVEUG and Longview Power LLC also filed responses in May to the petition echoing similar concerns with the PSC order. The PSC disagreed with the concerns raised by the parties.

"If a surcharge is implemented, it will not be to ‘funnel money’ to a non-jurisdictional facility," the PSC wrote in its order denying the petition. "To the contrary, it will be used to maintain the workforce and operational condition of Pleasants while Mon Power determines how Pleasants can fit into the capacity and energy requirements of the company, and whether, and to what extent, it will benefit West Virginia customers."

The report cited by the PSC in its April 24 order was published Feb. 24 by PJM, titled "Energy Transition in PJM: Resource Retirements, Replacements and Risks." According to the report, coal-fired power plants are retiring at a rapid rate while the growth rate for electricity demand is expected to increase. In its order Thursday, the PSC said the PJM report was previously included in the public record by the West Virginia Coal Association, a party in favor of the April 24 PSC order.

"The PJM Report 2023 is relevant to a proceeding involving the possible acquisition of a generation resource," the PSC wrote. "The Commission may not simply place its head in the sand and ignore a report by PJM, the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia.

"The facts are that Pleasants is in immediate danger of ceasing operations, which would include the loss of critical, experienced employees necessary to operate the plant in the future if negotiations are successful as well as the potential deterioration of the facilities if they are not properly maintained," the PSC order continued.

(Adams can be contacted at [email protected])

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