The closings of six coal-burning power plants operated by FirstEnergy Corp. could end up bringing higher electricity rates to much of northern Ohio several years from now, the state's utility regulators said.
The Public Utilities Commission of Ohio this week sent notice to the federal energy regulators that the closings "could have a dramatic impact on electric prices" in a region that stretches across the top of northern Ohio and dips into the central part of the state. That area includes Toledo, Cleveland and Youngstown and their suburbs.
FirstEnergy announced two weeks ago it was shutting down four coal-fired power plants in Ohio and one each in Pennsylvania and Maryland, blaming new environmental regulations aimed at reducing pollution.
It means there will be fewer power plants to meet the demand for electricity and that Akron-based FirstEnergy stands to make more money to keep their nuclear and coal plants available when the need for electricity spikes.
The end result is that customers in northern Ohio will pay higher prices than they otherwise would have in the coming years. How much will depend on the economy a few years now and the price of coal and natural gas.
Ohio's utility regulators have little influence over prices set at auctions that determine how much FirstEnergy receives to keep their plants available. But it does have the authority to regulate distribution rates, said commission spokesman Matt Butler.
The commission's notice filed this week is the first signal that it is keeping an eye on the situation. So far, it has not heard any concerns from consumer or industry groups, Butler said.
Analysts have predicted that prices paid to FirstEnergy for future capacity will double at a power auction scheduled for May. Citi Investment Research analyst Brian Chin expects the prices to be even higher than that and draw closer scrutiny from Ohio's utility regulators.
He said he thinks the public utilities commission will look for ways to keep down the prices. The auction in May will set capacity rates for 2015-2016.
High electricity prices are not only painful for individuals, but also can make it difficult to attract and keep businesses.
FirstEnergy's electric system has 6 million customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland and Virginia. In addition to the six plants closings announced two weeks ago, the company said this week it would close three coal-fired plants in West Virginia by September.
All of the plants targeted to shut down have been producing less power over the last few years, mainly during times of peak demand, the company said.