FirstEnergy Solutions has canceled its electricity deal with the state’s largest consortium of communities serving 500,000 customers, and the two are now locked in a legal battle.
FirstEnergy Solutions, a subsidiary of Akron-based FirstEnergy Corp., on Friday notified the Northeast Ohio Public Energy Council that it was canceling its nine-year contract three years early, effective Jan. 1.
Both parties have said customers will not be without power, as customers would revert back to the regulated company — either Ohio Edison or the Illuminating Co. — depending upon their service territory.
NOPEC officials said they’re already working on finding a new supplier for their customers.
The contract, which began in 2010, guarantees a 6 percent discount to consumers and a 4 percent discount to small businesses off electric prices charged by utilities Ohio Edison and the Illuminating Co. NOPEC is a consortium of more than 200 governments, including some communities in Northern Summit County and Portage County.
NOPEC Executive Director Chuck Keiper said FirstEnergy Solutions came out of the blue last week demanding concessions from NOPEC, and when NOPEC rejected the concessions, FirstEnergy Solutions instead canceled the contract.
Keiper said NOPEC officials had been waiting for FirstEnergy Solutions officials to complete required opt-out notices for its customers when instead it was surprised with what he called the “demands.”
“We detrimentally relied on them. They could have told us at a number of points, in time to allow us to get another power supplier,” said Keiper, calling the notice not the “11th hour,” but “the 13th hour.”
FirstEnergy Solutions spokeswoman Diane Francis said the company had been in discussions for a year with NOPEC and confirmed the company asked for concessions in the amount of money it paid NOPEC directly for its contract.
“They’re not exactly in line with … payments we make to other agents and aggregators. We were asking them to bring their fees in line with other aggregators,” said Francis, declining to disclose the fee.
FirstEnergy Solutions also has similar long-term deals with many other Akron-area communities for electricity aggregations. Francis said on Monday that none of those contracts are at risk.
In the meantime, a legal battle has ensued. On Friday, FirstEnergy solutions filed a motion in Summit County Common Pleas Court to block a check for an undisclosed amount that NOPEC pulled on FirstEnergy Solutions’ line of credit, as outlined in the two parties’ contract. The amount is confidential and was removed from court records.
Keiper said NOPEC is protecting its customers in going for the line of credit. There have been rumors in the industry that FirstEnergy Solutions or its parent company, FirstEnergy Corp. could be sold, taken over, or declare bankruptcy.
Company officials declined to talk about such speculation.
On Friday, the company, in its filing, said “making an immediate payment of this size on such short notice would require FES to borrow these funds, which would potentially cause severe business disruption, increase its debt load” and “potentially lead to a downgrade of its credit rating, and additional collateral calls from creditors [or both].”
The matter is before Summit County Common Pleas Judge Tammy O’Brien.
Keiper said his goal is to get a new supplier as soon as possible, and he is already in discussions with several companies. Because the timing is so short, there is a possibility that some NOPEC customers will return to the FirstEnergy utility, and then can re-enroll with NOPEC once the new offer is available.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty