Commission condemns Harrison sale

CHARLES TOWN – The Jefferson County Commission has become the third in the state to pass a resolution condemning the sale of an aging, coal-fired power plant in north-central West Virginia from one FirstEnergy subsidiary to another.

[cleeng_content id="673544581" description="Read it now!" price="0.49" t="article"]Commissioners Walt Pellish and Patsy Noland on July 11 voted against the Harrison Power Generation Plant measure. Commissioners Jane Tabb, Dale Manuel and Lyn Widmyer supported it.

For the second time in as many weeks, FirstEnergy sent two senior representatives to voice the company’s opposition to the resolution.

Director of External Affairs Charles Friddle argued that it was not the commission’s place to weigh in on a decision before the Public Service Commission. “Our primary argument continues to be that this is a complex issue,” he told the commissioners.

Friddle also attempted to refute several factual claims made in the resolution’s preamble, including that the Harrison plant’s proposed sale price is vastly inflated and that layoffs will not result from refusing the transfer of an 80 percent ownership stake in the plant.

Friddle said FirstEnergy had presented detailed financial analyses and the testimony of three expert witnesses to support the $1.2 billion price tag for the purchase.

Local energy efficiency activists Patience Wait and Karyn Newman, who came to prominence by successfully opposing the PATH project, spoke in favor of the resolution.

Newman said FirstEnergy recently moved to close two similar coal-fired plants in Pennsylvania which, she argued, demonstrates that the Harrison plant is unlikely to compete on the open market.

“They cited, as reasons for [closing the plants], the costs of environmental compliance – the EPA regulations,” Newman said. “They decided that retrofitting the plants was not cost-effective.”

If the Harrison plant is transferred to Mon Power, she argued, ratepayers will be forced to bear the risk of rising coal prices and federal regulatory burdens.

“They want us to take a bet that they won’t take themselves,” she said. “If the power plant is sold to us, we pay for it. The company doesn’t pay for it. So they’re trying to stick us with something that wasn’t a good business decision for them.”

Pellish opposed the resolution, saying that the commission did not have factual information sufficient to make a judgment about the proposed sale price, and that it is not the place of a county commission to meddle in affairs that are within the PSC’s purview.

“There is no supporting documentation to this resolution that supports the claims that are made here,” Pellish said.“Has anybody at this table researched that issue? Is anybody capable of researching that issue? I am not. I am not capable of affirming that that is a true, valid statement.”

Noland echoed the sentiment. “I haven’t seen factual information that would let me vote in favor of the resolution,” she said. “Having not been a part of the [PSC] hearing, having not heard the testimony that was presented at the hearing, I just don’t think that I’m in a position to either support or oppose the resolution. I don’t think I’m the person to make that decision.”

Tabb, on the other hand, said she had enough information.

“I have done some of my own research and talked to some more people and I understand Commissioner Pellish’s approach,” Tabb said. “Every business deserves the right to make a profit. We certainly are in a business ourselves and know it better than anybody else.”

“But I also look at the other side of the coin. Our family was involved with problems with a utility and another significant problem with a state agency, so I know how hard it is for an individual to make an impact without hiring a lawyer or going through the court process,” Tabb said. “They just think that you’re a pesky little fly.”

“Given some of that history, I’m going to vote for this. I think at times we have to take a stand as a county commission to be a bully pulpit for our individuals in the county.”

Manuel said it is important for the commission to protect consumers.

“I think that there are fewer and fewer institutions today that stand up for consumer rights,” Manuel said. “I just believe that we have an institution like West Virginia University giving you the facts – and I have studied the facts from those individuals. And everything that I can get a hold of indicates that this is not a good deal.”

“I do think it is our responsibility to try to protect the consumer.”

Wait had pointed to an analysis done by James Van Nostrand, a WVU professor of law who specializes in energy and environmental law. His findings concluded that the proposed sale price of the Harrison plant is out of line with recent open market sale prices as well as standard methods of valuing power plants in regulated markets.

Using the “original cost depreciated” method of valuation, which Van Nostrand claims is standard in regulated markets, he concluded that the 80 percent stake in the plant should be valued at around $574 million – about half of the proposed price.

He also pointed out that the 20 percent stake Mon Power currently owns has a book value of around $319 per kilowatt of generation capacity. The $1.2 billion proposal would value the remaining ownership stake at $767 per kilowatt, he said.

“This price disparity is inexplicable, given that there is nothing physically different in the four-fifths of the plant not owned by Mon Power versus the one fifth of the plant that Mon Power already owns,” Van Nostrand wrote, adding that the per-kilowatt price was around five times that seen in recent open market sales of supercritical coal generation plants.

The county commissions in Gilmer and Calhoun counties also have passed resolutions opposing the sale.[/cleeng_content]

 

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