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.
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.