veiled4allah: a fair and balanced report on Cleveland electric utilities

As an attempt to provide some (fair and balanced, of course) news reporting, here are the results of an evening spent Googling for information about Cleveland electric utility companies.

It started with this. ABC News has a report on the origins of the huge blackout in the Northeast. Apparently it all started with a disturbance in Cleveland that caused problems for the Ohio-Michigan grid. The Ohio-Michigan grid was unable to recover and after about an hour, blackouts began in Michigan and Ohio. Michigan's power grid separated from the larger national grid, but Ohio's failed to, and that's where the devil was in it, since Ohio sent its problems on to New York and the rest happened from there.

The Ohio power company involved is FirstEnergy Corporation, which runs seven electric utility companies in Ohio, Pennsylvania, and New Jersey. Its subsidiary in Cleveland is the Cleveland Electric Illuminating Company (shown on the map as "The Illuminating Company") although there's no information on whether CEI was the actual culprit.

In 1999, Ohio passed legislation to begin "restructuring" (i.e., deregulation) of its electric utilities. According to a report by WCPN in Cleveland from 2000, the impetus towards restructuring was primarily the high prices charged by CEI. These were due to CEI's failed investments in nuclear power plants starting from 1979 with the rate hikes beginning about ten years after that (chronology).

But this isn't even the real story about Cleveland's nuclear power plants. The real story is the Davis-Besse nuclear power plant, where corrosion left the plant dangerously close to a meltdown. Add to this lax regulation by the Nuclear Regulatory Commission because it wanted to lessen the financial impact of a shutdown on FirstEnergy (more) and we've got yet another sorry tale of corporate malfeasance.

FirstEnergy is also guilty of failing to meet pollution control standards.

Then there are the usual stories about large donations to Bush.

Not to mention the fact that, like Enron, FirstEnergy used to be audited by Arthur Andersen and when a re-audit was done recently, FirstEnergy started reporting losses that shocked consumers.

FirstEnergy was created by a merger in 1997 of Ohio Edison with Centerior Energy. Ohio Edison already owned the Pennsylvania Power Company while Centerior Energy was the result of a 1986 merger of CEI (mentioned above) and Toledo Edison. In 2001, FirstEnergy bought out GPU, which owned Jersey Central Power and Light, Metropolitan Edison, and Pennsylvania Electric. Another case of merger madness.

It appears that most of the malfeasance at Davis-Besse occurred during its Centerior years, although the truth didn't come out until Centerior had become FirstEnergy. Davis-Besse was originally built for Toledo Edison and apparently, a Toledo Edison employee named Howard Whitcomb first warned about the potential for problems back in 1988. So that's Toledo Edison's boondoggle.

As for CEI, it had been playing hardball with its main competitor, the publicly-owned Muny Light, for decades. In 1977, the Nuclear Regulatory Commission found that CEI had rigged electric grid interconnections to cause Muny Light to have power failures. These had caused Muny Light to go into debt. CEI then planned to buy out Muny Light and establish itself as a monopoly. The NRC ruling forced CEI to provide power to Muny Light. In return, the NRC granted CEI licenses for nuclear power plants (yes, those again).

But Muny Light, and with it the city of Cleveland, was still in trouble and in debt. A coalition of six banks decided to stop rolling over the city's loans and call in the debts - unless the city sold Muny Light to CEI. Strangely enough, five of the six banks together owned 1.8 million shares in CEI, and eight of CEI's eleven directors were also directors of four of the banks.

Cleveland's mayor refused to go along with the deal. The banks called in the loans, and Cleveland had to declare bankruptcy in 1979. Eventually, Cleveland worked its way back to solvency. Muny Light remained publicly-owned and is still so today (under its new name Cleveland Public Power).

Given that CEI spent the 1980s (as part of Centerior) spending money on nuclear power plants that didn't work out, then jacking up its rates to cover the costs, it should be no surprise that Cleveland residents have saved a lot by sticking with Muny Light. $300 million in savings, to be exact. They are glad that their mayor refused to sell Muny Light to CEI in 1979.

Looking at the history of CEI, Centerior, and FirstEnergy, I'd be glad too. So who was that mayor who knew not to give in to Enron-wannabe CEI? Dennis Kucinich



Added: MahaBlog has more about FirstEnergy and its Bush connections. And see Dennis Kucinich and First Energy for more background.