Potomac Edison looking to buy out contract with Warrior Run plant
Potomac Edison is looking to buy out its contract with AES Corp.’s Warrior Run coal-fired generating station approximately seven years early.
The company, owned by FirstEnergy Corp., would save customers nearly $80 million over that seven-year period if the proposal is approved by the Maryland Public Service Commission (PSC). The proposal was submitted this week.
The contract with AES Warrior Run in Cumberland, Md., was established in 2000 as a requirement of the Public Utility Regulatory Policies Act (PURPA) passed by Congress in 1978. Potomac Edison’s Maryland customers currently pay a Cogeneration PURPA Project Surcharge on their electric bill as a result. The surcharge is based on the price at which Potomac Edison can resell the power it purchased from Warrior Run. The surcharge amount varies significantly from year to year due to fluctuations in the market.
“By successfully negotiating a buyout of the Warrior Run contract, Potomac Edison is not only potentially saving customers a substantial amount of money, but also likely helping to stabilize their bills by eliminating charges that are based on a volatile market,” Linda Moss, president of Maryland Operations, said. “This is an important step toward keeping bills affordable and more predictable for our customers.”
If the contract buyout is approved by the PSC, customers can expect to see a lesser, set charge related to the cost to end the contract early rather than the fluctuating charge based on wholesale energy prices and capacity. However, the customers are likely to see significant savings over the remaining term of the agreement.
Potomac Edison serves about 285,000 customers in Allegany, Carroll, Frederick, Garrett, Howard, Montgomery, and Washington counties.
