Dynegy Inc. on Tuesday again lashed out at American Electric Power Co. and FirstEnergy Corp.'s proposed power purchase agreements with Ohio regulators, offering an alternative and saying it could save the state's consumers billions of dollars by providing power at lower costs and building more natural gas-fired power plants.
Last month, AEP and FirstEnergy settled with the Public Utilities Commission of Ohio (PUCO) and other stakeholders to help keep their uncompetitive plants running (see Daily GPI, Dec. 17, 2015). When AEP's settlement was announced, Dynegy called it "ill-advised."
Under the agreement, AEP would enter into an eight-year power purchase agreement for the capacity, energy and ancillary service output of its 2,671 MW ownership share of nine generating units and AEP Ohio's 423 MW share of Ohio Valley Electric Corp. generation. AEP would purchase power from the unregulated subsidiary plants to guarantee a profit and recover costs through customer charges instead of selling the power on the open market. It would also convert some units to natural gas and develop 900 MW of wind and solar projects in the state over the next five years.
FirstEnergy Corp. reached a similar agreement with PUCO and other parties to help make four of its coal and nuclear power plants more competitive. PUCO is expected to rule on both deals in the coming weeks.
Dynegy said it could save consumers and businesses $5 billion by providing the same amount of power promised under the purchase agreements. The company said it owns 5,400 MW at 10 different sites in Ohio, or more than FirstEnergy's 5,300 MW. It also said it could replace the plants being subsidized under the purchase agreements by building 6,300 MW of new gas-fired plants. The new capacity, Dynegy said, could power four million homes in the state and would utilize gas from the Utica Shale and other fields there.
Exelon Corp. also has offered an alternative and advised PUCO to reject the FirstEnergy deal. It said it could save consumers $2 billion over the eight-year period.
"The PUCO could also institute a request for proposal process containing the same arrangements in the AEP and FirstEnergy proposals," said Dynegy CEO Robert Flexon. "Exelon's recent proposal is also thoughtful, and Dynegy agrees with Exelon that this process should be competitive."
In response, AEP said there was no basis for Dynegy's cost savings, while FirstEnergy said Dynegy was ignoring the need for fuel diversity in the state.