Who Will Pay For This One???

Ohio-based FirstEnergy Solutions filed for bankruptcy this week.  I cannot say I’m sorry, for they brought it on themselves.  I’m sorry for the average-Joe who has money invested in FirstEnergy, sorry for the company’s employees who stand to lose their livelihood, but I have no empathy for the major shareholders, nor for the company’s executives.  Now, you might have seen this in the news, shrugged, and moved on to juicier news, like the latest about Stormy Daniels, figuring it doesn’t have much to do with you.  WRONG!

First things first.  The reason the power company is in self-inflicted financial trouble is its determination to tie itself to coal and nuclear plants instead of diversifying into renewable energy and other types of electric generation.  Whether Rick Perry, Scott Pruitt or Donald Trump choose to believe it, climate change is real and therefore the fossil fuel industry is a dying breed, being replaced by cleaner, cheaper renewable energy sources.  FirstEnergy failed to open its eyes, it beat a dead horse too long, and now it, too, is dying.

Worse yet, though, is the fact that FirstEnergy believed We The People should bail them out, despite their mortal wounds being self-inflicted. Two days before filing for bankruptcy, FirstEnergy asked Energy Secretary Rick Perry to use the department’s emergency powers to keep its coal and nuclear power plants open.  The company wanted Perry to declare an emergency in the power industry, saying the nation’s security would be jeopardized if the power plants were not kept open.  There is no national security threat here and industry officials and experts were largely angered by the request.

FirstEnergy Solutions’ coal and nuclear plants have been struggling to compete in the competitive power markets because of low wholesale power prices, a trend that has been sustained by low natural gas prices, rising renewable energy penetration, and relatively flat electricity demand — a result of consumer awareness and more energy-efficient appliances. For two years, FirstEnergy has realized they had problems, yet have done nothing more than warn that they might soon seek bankruptcy relief, assuming they would be bailed out by the taxpayers.

Back in January, Rick Perry came up with a plan to raise consumer energy bills in order to subsidize coal and nuclear power plants, in accordance with Trump’s determination to slow the progress of wind and solar energy.  Fortunately, the Federal Energy Regulatory Commission (FERC) unanimously rejected Perry’s plan (there are a few level heads left in Washington, it would seem).

In September 2017, Perry fabricated a threat to national security by saying that power grids using renewables were subject to instability and that FERC should force consumers to pay billions of extra dollars for coal and nuclear power plants that are already obsolete.

PJM Interconnection, the grid operator for FirstEnergy as well as others, said in September that there was no threat to national security and that “there was no need to use the agency’s emergency powers to keep FES’ five big power plants operating.”

In the bankruptcy suit, in addition for asking relief from the more than $1 billion owed to Bank of New York Mellon Trust Co., the company is seeking to be released from power purchase agreements with renewable energy producers.  The contracts were necessary at the time to acquire sufficient credits to meet state renewable portfolio standards, but they are no longer needed now, since the regulations have been largely gutted.

The upshot:

If Rick Perry decides to give in to the company’s request for the Department of Energy to declare an emergency, here’s what would happen.  The grid operator, PJM, would be forced to dispatch power from FirstEnergy’s coal and nuclear plants effectively before any other.  This means that while plants generating electricity through gas, wind or solar may be doing so much more economically, FirstEnergy would get to go to the head of the line.  The only good news is that it would protect the jobs of the nearly 3,000 employees of FirstEnergy.  The immediate downside is twofold:

  • It would hurt other energy companies, especially those who provide electricity from clean, renewable sources.
  • It would raise the price of electricity to consumers – both individuals and businesses – in the Midwest and Mid-Atlantic states.

Obviously there are other, more long-range consequences.  The fossil fuel industry is dying, and no matter how much of our money they throw at it, Trump/Pruitt/Perry cannot revive it in the long run.  When businesses start having to pay more for their electricity … guess what, folks?  They start charging more for their goods & services.  And then there is the added damage to an already sick environment, the parameters of which I cannot even begin to quantify.

This bankruptcy is making other fossil fuel-based energy companies nervous.  Remember Murray Energy?  They issued a statement that reads, in part:

“Murray Energy Corporation expresses our sincere sympathies to the management and employees of FirstEnergy Solutions Corp. (“FES”), during this very difficult time.  Indeed, what makes this matter even more hurtful is that this bankruptcy could have been avoided, had the Federal Energy Regulatory Commission (“FERC”) done its job and enacted the Department of Energy’s September 29, 2017 Grid Resiliency Pricing Rule, which sought to ensure the reliability, resiliency, and security of the electric power grids in our Country.  As a result of FERC’s failure, critical power plants will close, thousands of American jobs will be lost, and the reliability, resiliency, and security of our electric power grids will be forever compromised …”

Whatever happens, it is almost a given that the consumer will be on the raw end of this deal.  What I find more concerning is the blatant disregard of Rick Perry, as head of the Department of Energy, and Trump, as the leader of the nation, to see that they are beating a dead horse, and that it is we who will pay the price.

18 thoughts on “Who Will Pay For This One???

  1. Exactly what forms of “alternative energy” exist that are financially and technologically feasible? Other than oil and coal, the ONLY other energy producing method that is a proven technology is Nuclear. Neither wind nor solar has the technology to make it not only cost effective but these methods of energy production are NOT efficient. Solar costs more to produce than the energy it delivers. You don’t like oil? Don’t drive, throw out most of the pharmaceuticals in every hospital, throw out ALL of your plastic ware, all of your clothes that are not made of cotton, wool or any other all-natural fiber…etc.

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    • Mr. Singer, this is an interesting response. I also find of interest that Georgetown, TX, Burlington, VT, Greensburg, KS and Aspen, CO are all 100% renewable energy powered. I also find of interest that Houston, TX has a significant portion of its electricity from renewable energy,. In fact, Texas produces more wind energy than any other state producing about 16% of its electricity from wind and Iowa gets about 1/3 of its electricity from wind. And, Elon Musk aided a French company to solar power a major swath of southern Australia.

      Quoting Bob Dylan, “the times they are a changin.” I am very excited by these paths forward. Keith

      Liked by 1 person

        • Thanks Jill. I am excited by the trend in growth of renewables, especially as it impacts job growth here in the US with solar jobs growing double digit per annum for over five years and now about 4X the number of coal jobs.

          As for cost benefit, the Georgetown, Texas mayor and council said they weighed the renewable proposal against a natural gas one and chose it because of lower cost guaranteed for a longer period. Plus, Burlington has had a rate reduction in utility costs since implemented. I do recognize the market share is still too low, but do know if California was a country it would be in the top seven solar energy producers in the world. Right now, solar fields have been built in Northern Africa and Middle East to support those regions and offshore wind energy is supporting increasing percentages in Northern Europe. The trend rate is very promising. As an Independent voter who left the GOP in part for its stance on climate change, I find this very exciting and important. Keith

          Liked by 1 person

          • I, too, find it exciting and ever so encouraging. The naysayers may continue to live in their dream world where oil and coal are king, but one day soon they will awaken and see that 90% of all energy comes from renewable sources and that their dreams of grandeur have died. They can choose to hop on this train or not, but it will not wait for them. More people … far more people in this world are taking an interest in doing everything possible to save the planet, and those who would hold us back will be left at the starting gate. In this, at least, a new day dawns.

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    • I am more concerned for the environment and the future of humans on earth than you, perhaps. The burning of fossil fuels will ultimately make this planet unlivable for humans as well as many other species. I care about that. I don’t own a car and go travel very little. I am frugal with water and electricity. Now, you should probably look a bit closer at the cost/benefit analyses of wind and solar energy, for they are becoming ever more practical as the technology evolves. Fossil fuels are a dying breed. Period. Every nation except the U.S. apparently sees this, and frankly, I think even most climate science deniers know the truth, but it is more to their convenience and wealth that they pretend to disbelieve.

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  2. Jill, thanks for sharing. An energy expert said on NPR in 2016, Trump’s own plan will hasten the demise of coal as natural gas is cheaper and leaves fewer problems once the energy is created. Yet, what we should not lose sight of is the fossil fuel industry is the biggest benefactor of corporate welfare and still is, so expecting a bail out for a bad bet is not unheard of for them.

    Yet, we need to keep reminding folks to read the tea leaves as renewables continue to fall in price and grow at double digit rates. Plus, the cost is more predictable. Our friend Mr. Murray is using five – ten year old arguments.

    As we look at those tea leaves, I see the automotive industry failing to remember their role in their demise from the 1970s. The US companies made less quality cars and invited in foreign car makers into our market. In early 2000s, GM made a decision to shutter the EV1 electric car pilot and build Hummers instead. They could have been the dominant player in the electric car market. I mention this with the reversal on the mpg requirement. Like FirstEnergy, if they choose to ignore the tea leaves, they will become outdated. Keith

    Liked by 2 people

  3. Umm… why aren’t the multibillionaire owners/shareholders taking the hit? Isn’t that what capitalism is all about? Why do these capitalist creeps cry for government help and at the same time decry government aid to the poor and homeless? CORPORATE WELFARE BUMS!!!!

    Liked by 2 people

  4. Dear Jill,

    So now, FirstEnergy is the energy company where those who ran it are too stupid for it to fail. Where is written that “we the People” will bail out companies with tax payer monies or increased energy bills as consumers because the companies are poorly managed. Frankly most folks know that if a car is not well-maintained, where it falls into disrepair that it is not worth putting good monies to fix this losing situation.

    You are so right, it will be the tax payer and/ or the consumer who will pay for this debacle. And this stance allows the republicans to continue living in a dream world where climate change is not for real and where better managed energy companies are NOT moving away from fossil use to better, less expensive, cleaner sources of energy.
    The USA is supposed to be a capitalistic society.

    Hugs, Gronda

    Liked by 3 people

    • They party the night away, giving in to excesses and debauchery, and we are left to come in, clean up after them, and even pay them for the money they foolishly threw away. Nowhere is it written that we must do this, but at this point — who’s to stop them? It is a big free-for-all in Washington and we are footing the bill. Meanwhile, they are concerned more with how much they can have today, more than whether their grandchildren can breathe the air or drink the water tomorrow. If we don’t re-take at least one chamber of Congress in November … I cannot say what this nation will be by 2020 … it’s already a plutocracy.

      Liked by 3 people

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