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Ohio Valley Electric to appeal court decision on FirstEnergy Solutions contract

Ohio Valley Electric Corp. wants the U.S. Court of Appeals to weigh in on a jurisdictional dispute involving its sales contract with FirstEnergy Solutions Corp.

U.S. Bankruptcy Judge Alan Koschik on Aug. 9 issued an order authorizing FirstEnergy Solutions, or FES, to reject its share of a multiparty power purchase agreement with Ohio Valley Electric Corp., or OVEC. FES has a 4.85% sponsoring company stake in the OVEC-operated Kyger Creek and Clifty Creek coal plants through subsidiary FirstEnergy Generation LLC.

The judge's order adopts the language of a preliminary injunction granted in May and overrules objections from OVEC, Duke Energy Corp. subsidiary Duke Energy Ohio Inc. and the Office of the Ohio Consumers' Counsel, or OCC.

OVEC and Duke Energy Ohio argued that FES must seek approval from both the Federal Energy Regulatory Commission and the bankruptcy court to reject the the intercompany power agreement, or ICPA. The U.S. District Court for the Northern District of Ohio in an April 5 order found that "FERC and the Bankruptcy Court have concurrent jurisdiction over the ICPA."

The bankruptcy court overruled the "FERC-based objection" and also overruled OCC's objection that the contract rejection should require taking into account the public interest.

OVEC filed a complaint with FERC prior to the March 31 bankruptcy petition by FES and its subsidiaries, asking the commission to rule that the "anticipated breach" of the contract "would amount to a termination of FirstEnergy's purchase obligation in violation of the filed rate doctrine and ICPA."

FES and FirstEnergy Generation on April 1 filed a complaint for declaratory judgment and injunction against FERC as part of their request to void several long-term power purchase agreements, including the sales contract with OVEC.

The current term of the agreement runs through June 30, 2040. FES has said it could save $58 million annually through rejecting the contract.

OVEC is seeking leave to appeal the bankruptcy court's decision to the U.S. Court of Appeals for the 6th Circuit.