West Penn Power is looking at a $1.3 million fine for missing an energy demand reduction target three years ago.
The Greensburg-based electric utility, a division of Ohio-based FirstEnergy Corp., has known since 2011 that it might be facing a penalty between $1 million and $20 million for coming in below a target set by Pennsylvania’s energy efficiency and conservation law, Act 129.
That legislation required large Pennsylvania utilities to reduce their energy consumption by 1 percent by May 31, 2011, 3 percent by May 31, 2013, and to shave peak demand by 4.5 percent. Companies were to achieve these targets by educating consumers, offering rebates on energy efficient lighting and appliances and other incentives.
West Penn Power was the only utility in the state that didn’t reach the first threshold. It fell 57 percent short of its target. In March, the Pennsylvania Public Utility Commission asked its Bureau of Investigation and Enforcement to decide how much the utility should be fined.
The agency concluded that $11.3 million was the appropriate punishment, but West Penn Power objected, and the two parties launched negotiations that led to a settlement agreement and the much slimmer $1.3 million figure. The settlement must now be approved by the PUC, which is expected to happen within the next month.
In it’s objections, West Penn Power argued that even though it didn’t reach the 1 percent target, it did reach and, indeed, exceed all others. It touted its success with low-income customers and the government sector, and claimed that the first target was "merely an interim goal," a stop-over on the way to the 3 percent goal, not a destination on its own.
The company’s “budget to achieve reductions is capped,” West Penn said, and the utilities with “the lowest rates are given the least amount of funds to incent customers to conserve electricity usage,” the company wrote to the PUC.
Because of all that, West Penn claims that the entire act “is likely to be deemed unconstitutional by a reviewing court.”
“Clearly the company did its utmost to meet the obligation and did in fact meet the 1 percent reduction goal less than a year after the May 31, 2011 deadline,” the utility argued.
FirstEnergy took over West Penn Power in February 2011, when it acquired Allegheny Energy Inc. It promptly changed the way the local utility administered its energy efficiency and conservation programs, outsourcing some functions that had previously been handled in-house. That brought West Penn Power into compliance by Nov. 2011.
West Penn's $1.3 million penalty, if approved, will come from the company’s coffers, not its ratepayers.
Pennsylvania utilities are now in the second phase of Act 129 which requires further energy reductions.
Anya Litvak: email@example.com or 412-263-1455.