WVCAG appeals Harrison power plant sale - Beckley, Bluefield & Lewisburg News, Weather, Sports

WV Citizens Action Group appeals Harrison power plant sale

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The West Virginia Citizen Action Group filed an appeal with the West Virginia Supreme Court of Appeals Nov. 6 to overturn the Public Service Commission's decision to allow Mon Power and Potomac Edison to purchase the Harrison power plant from another FirstEnergy subsidiary.

The PSC gave final approval Oct. 7 to the plan allowing Monongahela Power Co. to acquire the Harrison Power Station and sell its ownership of the Pleasant Power Station.

The total transaction involves a net payment by Mon Power to Allegheny Energy Supply Co. of about $1.102 billion. Mon Power will acquire the 79.46 percent interest in Harrison now held by AE Supply, and Mon Power will sell its 7.69 percent interest in Pleasants to AE Supply. All companies involved in the transaction are subsidiaries of FirstEnergy.

WVCAG cites what it calls four assignments of error in its appeal:

The PSC's approval of any acquisition premium in the rate base attributable to the Harrison power plant purchase violated universally recognized principles of "cost-based" rate making and the PSC's own consistently applied precedent in prior cases.

The merger stipulation incorporated into the PSC's 2010 decision approving the merger of FirstEnergy and Allegheny Energy, expressly prohibited the pass-through to West Virginia ratepayers of "any acquisition premium" associated with the merger transaction.

The PSC findings that likely future carbon costs and speculative price projections barred the unconditional pass-through to West Virginia rate payers of either a $589 or a $257 million "acquisition adjustment," also barred PSC approval of the "conditional" pass-through of a $257 million markup over the original cost of Harrison.

In the absence of any substantial evidence that the Harrison sale was the product of "arms length negotiations," the PSC's approval of the Harrison purchase violates state law against "undue advantage" in inter-affiliate transactions.

When the PSC issued its decision, WVCAG contended the markup in price was "a transparent effort to bail out FirstEnergy Corporation."

"FirstEnergy – the owner of both Allegheny Energy Supply and Mon Power – announced earlier this year its need to reduce debt by $1.5 billion, and FirstEnergy CEO Anthony Alexander noted in a quarterly earnings call earlier this year that the Harrison transaction was ‘critical' to the company's debt reduction plans at the time it was proposed," the WVCAG statement said. "The effect of the PSC order is to move more than half of that $1.5 billion debt off of FirstEnergy's balance sheet and onto the electric rates of Mon Power and Potomac Edison customers."