Business

Time to Stop the FirstEnergy Solutions Bailout

The owner of two Ohio nuclear plants claims they are unprofitable and wants a $150 million annual bailout. Problem is: They make money!
( PR4US.com | Press Release | 2019-07-17 16:15:35 )
(CLEVELAND)--July 17, 2019 PR4US.COM--There may have been a case once for Ohio to subsidize FirstEnergy Solution’s two nuclear plants in Ohio. But the company’s deceit and dishonesty in providing false and misleading information to the state legislature and the public now make that virtually impossible.

FirstEnergy Solutions is claiming it needs $150 million a year from the state because its Davis Besse and Perry plants, now in bankruptcy court in Akron, are running at a loss. Is this true? “It wouldn’t be in bankruptcy court if it wasn’t in the red, correct?” responds Republican Senate spokeperson John Fortney.

But that may be the misperception that is keeping the whole boat afloat. FirstEnergy Solutions has five businesses involved in its ongoing bankruptcy case, and the two nuclear subsidiaries, known as FENG and FENOC, are profitable.

That’s according to a monthly operating report filed by FirstEnergy Solutions itself in May of this year. According to Senate testimony by the Ohio Consumer’s Counsel, the two nuclear plants have a profitable operating margin of almost $50 million since the company filed for bankruptcy in May of 2018. FENG had an operating profit of $18.4 million in May alone.

A second study, by Paul Sotkiewicz, former chief economist for PJM, the largest U.S. power grid operator in the country, said that the Davis Besse and Perry nuclear plants generated annual profits of $28 million and $44 million respectively, and are “among the most profitable of their kind in the nation.” Arie Peskoe, director of the Electricity Law Initiative at Harvard Law School, says Sotkiewicz is a “credible" expert.

So is it reasonable to believe that FirstEnergy Solutions is acting in good faith in its bankruptcy proceedings. Maybe not. In April, federal authorities charged FirstEnergy Solutions and its former parent company, FirstEnergy, with concocting a “scheme” that was "an abuse of the bankruptcy system,” and filed legal papers to that effect. That’s because FirstEnergy Solution’s initial bankruptcy filing, which was rejected by the judge, sought to absolve FirstEnergy of any future responsibility for costly power plant closings and clean-up.

On another front, in June the Ohio Supreme Court struck down a sweetheart deal in which the Public Utilities Commission of Ohio had given FirstEnergy $600 million in a “distribution modernization rider” that allowed it to tack a fee onto its customers’ bills for modernization of its system. Problem is, FirstEnergy didn’t modernize its system. According to testimony by the Ohio Consumer’s Council, the company used the money to increase dividends to its investor/owners from $152 million a year to $375 million a year. This again shows a lack of good faith.

Although Ohio media no longer quotes Democrats, several who spoke to me noted other valid reasons not to give FirstEnergy Solutions a bailout. Sen. Andrew Brenner, a Democratic member of the Senate energy committee that is considering the bill, said that FirstEnergy Solution's controller was evasive and “avoided answering my questions” in Senate hearings.

Dem. Sen. Nickie Antonio said the problem for her was that FirstEnergy Solutions refused to provide her with any “math” to show that they really needed the subsidy. That is, she said, they wanted the money but refused to prove that they needed it.

Tom Becker of FirstEnergy Solutions explained it to the press this way: “The company is operating under several non-disclosure agreements as part of the bankruptcy and is precluded from disclosing non-public information.” But bankruptcy attorneys contacted for this article said that was patently false.

FirstEnergy Solutions even seems to be lying about the cost of its nuclear fuel. It said in June that it needed $52 million immediately to order new fuel or it would have to begin the process of shutting its plants down. But the price of uranium has dropped precipitously from $48 a pound to $22 a pound, making that statement, too, extremely dubious. Sotkiewicz calls that deadline phony in any event.

It’s hard to imagine a company making a worse case for a subsidy than FirstEnergy Solutions has. A “dark money” statewide television ad campaign costing as much as $7 million dollars by a shadow group called “Generation Now” insults the public further by featuring kids playing t-ball and eating ice cream cones in support of its sought-after $1.5 billion subsidy.

FirstEnergy has gotten an astounding $10 billion dollars in subsidies from the state in the past. It’s time for the state legislature to put its foot down and say a resounding “no.”


Press Information


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Jeff Barge
https://www.linkedin.com/in/jeff-barge-a02304b7/

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