Congressman Dennis J. Kucinich of the 10th District of Ohio has written to the Chairman of the Federal Energy Regulatory Commission (FERC) urging that an investigation be initiated with regard to various operational and commercial arrangements associated with the Prairie State Generating Company, the owner of a newly-constructed coal fired plant in Marissa, Illinois. Citing undisclosed “problems with the financial stability and the long-term reliability of the plant”, he specifically calls out for review the arrangements between the plant and its public power owners, including American Municipal Power, and the members of such owners, such as Cleveland Public Power.
He notes that the price of electricity from the plant exceeds initial estimates and exceeds the open market price, and characterizes the plant as a liability rather than an asset. He alludes malfeasance in stating that “the cost increases were mostly foreseeable and preventable had the sellers or buyers [sic] provided full disclosure and/or done their due diligence.” At the same time as he cites foreseeable risks, he notes that construction defects occurred and operational problems have arisen and affected costs. He further accuses Peabody Energy Corporation, a 5% owner of the facility and the owner of an associated mine and ashfill, of poor management of both the mine and the ashfill. First and foremost, however, he asserts that new coal plants are a bad financial risk.
He asks that any FERC investigation include whether the public power agencies that have an ownership interest in or are offtakers from the plant are in compliance with FERC regulations regarding outage reporting, whether the plant is complying with MISO and PJM bidding rules, and how the costs and certain power resources are allocated between the public power entities. His letter provides no basis for the connection between these concerns and his overall concern that an investment in this coal plant was a raw deal for Midwest ratepayers, nor does he explain what jurisdiction FERC has over the public power agencies.
Investigations as to rates, charges and practices of public utilities are governed by Section 206 of the Federal Power Act (FPA), which requires the complainant or FERC to bear the burden of proof to demonstrate that any existing rate, charge, classification, rule, regulation, practice, or contract is unjust, unreasonable, unduly discriminatory, or preferential. The public power entities are not public utilities pursuant to the FPA.© 2013 Bracewell & Giuliani LLP