Trish Demeter, Chief of Staff, August 27, 2015
Who remembers Columbia House? If you are a Gen X-er like me, you may recall Columbia House because it was the first debt you had to pay off during your college days. If you are young enough to have come of age in the era of MP3s, let me explain: Columbia House was a mail-order company that got you to buy a couple CDs for super cheap. Sounds pretty great huh?
The problem is after you got that awesome Alanis Morissette CD, they would start sending you scads of unwanted CDs you never requested. Adding insult to injury, accompanying that unsolicited Chumbawamba CD was a huge bill – not for the CDs you actually ordered, but for all the crummy, unsolicited CDs they sent you. As you stare at the bill, wondering how you’d ever scratch together that kind of dough on your pizza delivery wages, you would ask yourself, “Maybe this is why my Dad said to always read the fine print?”
Given this frustrating business model, it’s no wonder Columbia House recently filed for bankruptcy. And while one would think that other industries would have learned from the failed business model of Columbia House, instead, utility giant FirstEnergy is trying to copy it in its latest rate-setting plan currently pending before the Public Utilities Commission of Ohio (PUCO). If you live in FirstEnergy’s territory, and if they get their way, you may soon be forced to hand over a chunk of your hard earned money for something you don’t necessarily need – or want – for that matter. Sound familiar?
So, here’s the fine print in FirstEnergy’s plan: the company is proposing to lock customers into a 15-year scheme to buy electricity from their old, inefficient coal-fired power plants, and one of its poorly maintained nuclear plants. If the PUCO approves their plan, folks will be on the hook for up to $3 billion!
That makes those Columbia House bills look like a drop in the bucket. To top it off, the cash coming out of your pocket will be used to purchase power from these highly-polluting power plants. This will all but guarantee that they stay open and operate for the next decade or so, chugging out emissions that cause global warming and increase asthma rates among Ohio’s most vulnerable populations.
You see, Ohio is what’s considered a Customer Choice state. This means that while you can’t choose who serves you the electricity – because serving customers is based on where you live, who owns the power lines coming into your home, etc. – you can choose (to some extent) where you get your electricity from. If you are in FirstEnergy’s neck of the woods, they will always be your distribution utility (sorry…), but you can opt to buy your power from another company – Duke, AEP, or any other retail provider. This gives you a lot of power, as a customer, to demand cleaner resources like wind and solar, too.
The problem with FirstEnergy’s plan is that they are trying to circumvent your choice. Don’t want to buy their coal-fired, and risky nuclear-generated power? Rather purchase your electricity from a provider that offers more sustainable choices and power sources that aren’t wreaking havoc on the environment, or causing global warming? Too bad!
Here’s the kicker: even if you DO choose a different retail provider, you will still be on the hook for 15 years to pay for the coal and nuclear-generated power. So, while you get your preferred choice – maybe it’s a lovely 100% renewable power offering that helps you sleep at night, and breathe easier – you will still have to pay for the power you don’t want, too. Suddenly, that unwanted and quickly discarded Chumbawamba CD takes on a whole other meaning.
Why is FirstEnergy – not to mention two other utilities that are proposing the same raw deal – doing this? It has a lot to do with the Customer Choice policy I mentioned earlier. The intent of this law – established in 1999 – was to create a market for power generation where different providers and resources would compete, and thus drive down the price of electricity while driving innovation in this slow moving industry.
As renewable resources have entered the market more and more over the past fifteen years, they’ve also gotten cheaper, more efficient, and frankly, more popular. The policy is actually executing on its intent – renewables are directly competing with coal and nuclear power – and these old, outdated plants are getting left behind by the market. In just a short time span, the share of coal-fired power in Ohio’s energy portfolio has shrunk from 85% to 67%. Many of Ohio’s coal-fired plants are what I like to call baby-boomer coal plants, built in the 1950s and 60s. It’s just time for them to retire!
As if that weren’t enough, FirstEnergy’s plan would have its customers paying for coal-fired and nuclear power that is generated by plants owned by its sister company, FirstEnergy Solutions. Not only are they guaranteeing their customers pay for power from these facilities, they are guaranteeing that the profits earned from the energy sales stay within their family. This is protectionist, and skews the competitive market in a radical way. Now isn’t it ironic that FirstEnergy was a huge proponent of the legislation that created Customer Choice back in 1999. So, FirstEnergy’s playbook seems to be indicating that competitive markets are great, unless you can’t compete.
Possibly the biggest problem with this proposal, however, is that it means that these power plants – responsible for millions of tons of greenhouse gases, and harmful emissions that make people sick – will be artificially propped up with customer money for at least fifteen years. A lot can happen in a competitive market in one day, let alone a decade and a half.
If the PUCO honors the policy of the state, in which customers allegedly have a choice, and in which competitive markets are disciplined to weed out the risky, and costly resources, then FirstEnergy’s plan won’t move forward. Next week, the hearings on this case will begin, and the utility will undoubtedly be bringing their experts and attorneys to argue their point. You’ll be happy to know that we’re bringing our A-game, and we have many friends on our side of the table. We will keep you posted on how this debate ensues.
You can also do something about this issue! Tell the PUCO to say no to FirstEnergy’s bailout scheme!