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Dynegy Jumps into FirstEnergy, AEP ‘Bailout’ Fray

January 19, 2016 By Cheryl Kaften

“In response to the exorbitant and counter-productive subsidies currently under consideration for FirstEnergy and American Electric Power (AEP),” Houston-based Dynegy announced on January 12 that it is offering two counter-proposals to the Public Utilities Commission of Ohio (PUCO) that it claims “will save the state’s ratepayers billions of dollars over the next eight years, promote and protect Ohio jobs, aid in Ohio’s compliance with the Clean Power Plan, and encourage consumer and business growth.”

Dynegy is owns and operates 35 power plants in eight states nationwide – California, Connecticut, Illinois, Ohio, Massachusetts, Maine, New York, and Pennsylvania – all of which are natural gas-fired or coal-fired. The company services 830,000 residential customers and 23,000 commercial, industrial, and municipal customers, generating 26,000 megawatts (MW) annually.

The company is jumping onto the bandwagon after Exelon Generation intervened (Docket No. 14-1297-EL-SSO) in the ongoing, contentious FirstEnergy rate case late last month – asserting that it could offer ratepayers a better deal.

The first proposal would, the company said, save Ohio consumers and businesses $5 billion by providing the same amount of power promised under the FirstEnergy and AEP power purchase agreements (PPAs) at lower prices –$2.5 billion each in the FirstEnergy and AEP territories – over the eight-year term of the proposed PPAs.

The power provided under this proposal “would be generated by Ohioans, at Ohio plants, for Ohioans,” Dynegy said, adding that it “owns about 5,400 MW at 10 different sites in Ohio – more than FirstEnergy’s 5,300 MW –employs hundreds of Ohio workers, and is the third largest retail electric provider in the state.”

Furthermore, Dynegy said, its power plants “use the region’s vast fuel supplies, including its abundant and clean natural gas, providing further benefits to the state.”

Alternatively, if PUCO agrees on paying the out-of-market rates requested by AEP and FirstEnergy, “Dynegy believes that Ohioans should get something for their money.” At the proposed rates, Dynegy said it could replace the plants being subsidized under the FirstEnergy and AEP PPAs “by building 6,300 MW of new, clean natural gas powered generation in Ohio, bringing new jobs to the state, increasing economic activity and development, and providing reliability and resource adequacy for decades.”

This new generation could power 4 million Ohio homes and would use natural gas from Ohio’s supply to meet the state’s electricity needs.

“If the PUCO and other elected officials in the state are interested in protecting consumers’ and business’ long-term interests while ensuring long-term reliability and price stability, then in lieu of accepting FirstEnergy’s and AEP’s proposals for long term power purchase agreements, the PUCO should adopt one of the alternate, superior proposals Dynegy is putting forth,” said Dynegy CEO Robert Flexon, adding, “The PUCO could also institute a request for proposal [RFP] process containing the same arrangements in the AEP and FirstEnergy PPA proposals. Exelon’s recent proposal is also thoughtful, and Dynegy agrees with Exelon that this process should be competitive.”

“We believe the counter-proposals are uniformly better for Ohio consumers and businesses than the AEP and FirstEnergy PPAs, keeping and creating jobs in the state that stimulate economic growth and development rather than weakening Ohio’s competitive position. We ask for serious consideration from the PUCO and Ohio elected and state officials for our proposals,” added Flexon.

None of the other participants in the case had commented at press time.

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