Why This Utility Giant’s $4-billion Coal Bailout Is An Ill-Fated Energy Strategy
Tuesday February 2, 2016
Clean energy investments are soaring worldwide, and the United States is no exception with $56 billion going toward renewable generation in 2015, an 8-percent increase over the year before.
So why are some utilities going against this trend and risking a contest against more progressive competitors that are gaining market share at their expense?
To understand why, it helps to have a closer look at Ohio-based FirstEnergy, a large investor-owned energy company with operations in six states that has become the poster child for resistant utilities.
The FirstEnergy case also illustrates why companies that refuse change won't be able to stop the rising clean energy tide, no matter how hard they try.
A $4-billion fossil bailout paid for by consumers
At the moment, FirstEnergy has an expensive proposal to the tune of nearly $4 billion before the Public Utilities Commission of Ohio to protect its inefficient, polluting and unprofitable fleet of power plants.
The utility has been trying to convince regulators to prop up its plants for the next eight years, essentially saddling people in Ohio with the cost of FirstEnergy's coal and nuclear investments.
The company needs the money because it doubled down  on dirty power plants that became uneconomical when natural gas prices dropped and energy efficiencies took a bite out of the company's revenues. These decades-old energy assets are now at risk of getting stranded as power costs drop.
If FirstEnergy prevails in the case it would be able to secure revenues well above what the market would provide from its uneconomical nuclear and coal plants through 2024, even ifless expensive electricity became available elsewhere.