nuclear-news

FirstEnergy Solutions has been claiming for more than a year that it needs $150 million a year from the state because its Davis-Besse and Perry nuclear power plants, now in federal bankruptcy court in Akron, are running at a loss.

But is this really true?

“It wouldn’t be in bankruptcy court if it wasn’t in the red, correct?” responded Ohio GOP Senate spokesman John Fortney when asked that question.

But that may be the misconception that is keeping the whole boat afloat. That so-called “fact” may not be true after all.

FirstEnergy Solutions actually has five businesses involved in its ongoing bankruptcy case, and the two nuclear subsidiaries, known through the acronyms “FENG” and “FENOC,” are profitable.

That has been firmly established by copies of a monthly operating report filed with the bankruptcy court by FirstEnergy Solutions in May of this year. According to Senate testimony by the Ohio Consumers’ Counsel that presented these documents as evidence, the two nuclear plants have had a profitable operating margin of almost $50 million since the company filed for bankruptcy in May 2018. According to these documents, FENG had an operating profit of $18.4 million in May 2019 alone.

As if it were needed, a second study also proved the two plants are profitable. This one is by Paul Sotkiewicz, former chief economist for PJM Interconnection LLC, the largest U.S. power grid operator in the country. That study, which was commissioned by oil and gas group API-Ohio, said the Davis-Besse and Perry nuclear plants generated annual profits of $28 million and $44 million, respectively, and are “among the most profitable of their kind in the nation.” Arie Peskoe, director of the Electricity Law Initiative at Harvard Law School, said Sotkiewicz is a “credible” expert.

And let’s face it — is it even reasonable anymore to believe that FirstEnergy Solutions is acting in good faith? Not if you look at its most recent history.

In April, for example, federal authorities accusedFirstEnergy Solutions and its former parent company, FirstEnergy, with concocting a “scheme” that was “an abuse of the bankruptcy system,” and filed legal papers in bankruptcy court in Akron to that effect. That’s because FirstEnergy Solutions’ initial bankruptcy filing, which was rejected by U.S. Bankruptcy Judge Alan Koschik, sought to absolve FirstEnergy of any future responsibility for costly power plant closings and cleanup estimated in the billions.

The public would have been on the hook for this cleanup. Nice try, FirstEnergy.

On another front, the Ohio Supreme Court in June struck down a sweetheart deal in which the Public Utilities Commission of Ohio had given FirstEnergy $600 million in a “distribution modernization rider” that allowed it to tack a fee on to customers’ bills for modernization of its energy grid. Problem is, FirstEnergy didn’t modernize its energy grid. According to testimony by the Ohio Consumers’ Counsel, the company used the money to increase dividends to its investor/owners from $152 million to $375 million a year. This again shows a lack of good faith. It diverted the fixup funds to Wall Street.

And that’s where the Ohio bailout money would go — straight from Columbus to Wall Street. As a July 8 headline in The Bond Buyer crowed: “FirstEnergy nuclear bailout would be a win for bondholders” — some of whom may have bought the bonds for pennies on the dollar after FirstEnergy’s bankruptcy.

Several state senators who spoke to me before the scheduled vote noted other valid reasons not to give FirstEnergy Solutions a bailout. In an email, state Sen. Andrew Brenner, a Republican member of the Senate energy committee that heard testimony on the bill, said that FirstEnergy Solutions’ controller was evasive on the stand and “avoided answering my questions” in Senate hearings.

Democrat state Sen. Nickie Antonio said her problem was FirstEnergy Solutions refused to provide her with any “math” to show they really needed the subsidy. That is, she said, they wanted the money but refused to prove they needed it.

Tom Becker of FirstEnergy Solutions explained it to the Plain Dealer this way: “The company is operating under several non-disclosure agreements as part of the bankruptcy and is precluded from disclosing non-public information.” But bankruptcy attorneys contacted for this article said that was patently false.

FirstEnergy Solutions even seems to be lying about the cost of its nuclear fuel. It said in June it needed $52 million immediately to order new fuel or it would have to begin the process of shutting down its plants. But the price of uranium has dropped precipitously from $48 a pound to $22 a pound, making that statement, too, dubious. Sotkiewicz, chief economist for PJM Interconnection LLC, calls that deadline phony.

It’s hard to imagine a company making a worse case for a subsidy than FirstEnergy Solutions has. A “dark money” statewide TV ad campaign costing as much as $7 million and paid for by a shadow group called “Generation Now” insults the public further by featuring kids playing T-ball and eating ice cream cones in support of the sought-after $1.5 billion subsidy.

The people who named FirstEnergy “Solutions” when it went into bankruptcy — almost immediately after being spun off from its parent — must have had a good laugh at the time. Spinning off all your debt into another corporation that immediately declares bankruptcy and reneging on your debts and business contracts must have indeed have seemed the ideal “solution.” Nancy Pelosi would have clapped.

But Ohioans have paid $10 billion in subsidies to First Energy in the past, and it’s far past time to pull the plug. The House should vote no on the Ohio nuclear bailout when it reconvenes on Aug. 1.