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In a long-awaited decision, the Public Utilities Commission of Ohio (PUCO) yesterday approved a $600-million electricity rate plan for FirstEnergy.

One read of the decision is, regulators killed the Ohio-based utility giant's massive bailout and ordered the utility to modernize its grid. If accurate, this would be an incredible victory: Dirty power plants would not be subsidized, FirstEnergy would not be rewarded for its poor business decisions, and the company would invest in measures that increase efficiency and welcome clean-energy resources.

Ah, if the PUCO order were only so clear. On the one hand, it does seem the regulators are giving FirstEnergy $600 million upfront and requiring it to spend those funds on grid-modernization programs the PUCO will approve in the future. Yet, the more realistic read is, Ohio regulators are simply handing FirstEnergy $600 million in hopes the subsidy will allow the utility to improve its balance sheet. Then, FirstEnergy will (hopefully) propose grid-modernization efforts that the PUCO will consider and fund down the line. In other words, the PUCO is providing FirstEnergy a no-strings-attached subsidy.

The decision is unusual and a bit difficult to interpret even the PUCO chairman admits the approach is undoubtedly unconventional.†The only certainty is that this issue will not die. Environmental Defense Fund and its allies will continue to press the PUCO and the Ohio Supreme Court to ensure the $600 million goes toward building a cleaner, more modern electric grid.

FirstEnergy's bailout background

A little history here is helpful. About two years ago, FirstEnergy requested a $4-billion bailout to keep operating its old, uneconomic, and dirty power plants. The PUCO agreed, but the Federal Energy Regulatory Commission (FERC) objected, saying the $4 billion was an illegal subsidy that would distort competitive electricity markets. In order to avoid FERC jurisdiction, FirstEnergy then View Full Article