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Sierra Club appeals PUCO approval of FirstEnergy 'bailout' to Ohio Supreme Court

The Sierra Club, represented by Earthjustice, has asked the Ohio Supreme Court to overturn regulatory approval of what the environmental groups contend is a financial "bailout" for FirstEnergy Corp. and its shareholders.

The environmental groups filed a notice of appeal Oct. 16 with the state Supreme Court and the Public Utilities Commission of Ohio challenging the PUCO's decision to approve a three-year, $204 million distribution modernization rider for FirstEnergy's utilities.

The PUCO on Aug. 16 largely affirmed its October 2016 decision to approve the annual distribution rider, rejecting applications for rehearing sought by the Sierra Club, Office of the Ohio Consumers' Counsel, Ohio Environmental Council, Ohio Manufacturers' Association Energy Group and other intervenors.

The rider was approved to protect FirstEnergy's credit rating while providing benefits to customers through grid modernization. The PUCO's order also allows for a possible two-year extension of the rider, potentially bringing in about $1 billion in revenue for FirstEnergy.

The Sierra Club argues the rider is not authorized under Ohio law largely because it is essentially an "unlawful transition charge" designed to help FirstEnergy combat challenging market conditions for its unregulated generation. In addition, the appeal notes there is no direct link or requirement tied to grid modernization or costs incurred for providing service to customers.

The environmental groups are asking the court to reverse, vacate or modify the PUCO's order with instructions to the commission to correct the numerous errors outlined in the appeal.

"Forcing Ohio utility customers to finance FirstEnergy's corporate slush fund simply has no basis in Ohio law," Shannon Fisk, managing attorney at Earthjustice, said in a news release. "The PUCO did not fulfill its duty to protect customers from FirstEnergy's unending requests for bailouts; therefore, we will take our argument to the Ohio Supreme Court."

FirstEnergy advocated for a modified version of a previous PUCO-approved generation rider to subsidize its plants in response to the Federal Energy Regulatory Commission's April 2016 decision that it must review the power sales contract between FirstEnergy affiliates.

PUCO staff, however, recommended regulators reject the revised generation PPA and instead approve a three-year, $131 million distribution modernization rider for FirstEnergy's electric utilities.

The Ohio Manufacturers' Association Energy Group also has appealed the PUCO's rulings in this case to the Ohio Supreme Court. (PUCO docket 14-1297-EL-SSO)