A federal judge said bankrupt FirstEnergy Solutions should not have to pay $58 million a year to a pact overseeing coal-fired electric generation plants — a pact that includes Dayton Power & Light (DP&L).
DP&L, with other Ohio power companies, make up the Ohio Valley Electric Corporation (OVEC), which operates the older, coal-fired power plants on the Ohio River.
OVEC members are arguing that the bankrupt company cannot withdraw from contributing to the operation of the aging plants, leaving DP&L, American Electric Power of Ohio and Duke Energy — and their customers — to take on the plants’ costs themselves.
OVEC filed a complaint to the Federal Energy Regulatory Commission in March — a few days before FirstEnergy Solutions declared bankruptcy — to prevent FirstEnergy Solutions from withdrawing from financial obligations for the joint operation of the plants.
FirstEnergy’s exit from the pact could leave OVEC’s members — and their customers — with “hundreds of millions of dollars over the remaining life of the contract,” OVEC has said.
The preliminary injunction was granted Friday in Cleveland’s federal bankruptcy court.
In a five-page ruling, Judge Alan Koschik said: “A successful suit by FERC, or by OVEC or other counter-parties to the [OVEC] contracts before FERC, would result in a pecuniary advantage to certain private parties vis-a-vis other creditors of the debtors’ estates, contrary to the bankruptcy code’s priorities,” Koschik said. “Seeking that result is the obvious and dominant purpose of the FERC proceeding.”
The ruling can be appealed.
FirstEnergy Solutions Corp. is the plaintiff in the case while the Federal Energy Regulatory Commission is the defendant. OVEC is identified as an “intervenor-defendant.”