Breaking Inertia’s Magical Power: Can companies like FirstEnergy change their ways?


Beyond physics, Merriam-Webster describes inertia as, “indisposition to motion, exertion, or change.” We all know that if you’ve been doing anything a certain way for a long time, it can be hard to let go. But at some point, outside forces can become strong enough to alter a course, and the earlier that new course is accepted, the easier a transition can be.

The energy transition from dirty fossil fuels to clean, renewable sources isn’t just coming, it’s here. Bloomberg New Energy Finance commented at an April presentation of their New Energy Outlook 2017 report that what was once referred to as “alternative energy” is now normal. The costs of technologies like solar, wind, and storage continue declining such that these options are not only affordable, but competitive. Among the mounting pressures pushing the market to move are consumer demand, regulatory changes, grassroots mobilization, and investor concerns.

While some companies are beginning to plan for the future by shifting their portfolios from polluting fossil fuels to cleaner sources, other laggards remain under the magical spell of inertia. This appears to be the case for FirstEnergy, whose CEO told the U.S. Chamber of Commerce in 2014 that while renewables “sound good,” a renewed focus should be placed on fossil fuels. The Ohio-based utility relies heavily on coal and while it claims to have a carbon emissions reductions target, it has yet to identify a path or take any significant steps to move away from high carbon fuels.

In light of FirstEnergy’s stance, As You Sow, joined by co-lead Connecticut Retirement Plans and Trust Funds, re-filed its proposal last week requesting that FirstEnergy disclose how the reduced demand for fossil fuel required to keep global warming under the globally recognized goal of two degrees Celsius will impact the company’s profitability. A similar proposal filed last year received a record 43.4% vote demonstrating strong shareholder concern for this issue. So how has FirstEnergy responded?

Ignoring such concerns, FirstEnergy has faced mounting financial struggles due to its refusal to change course. Subsidiary FirstEnergy Solutions has teetered near bankruptcy as it retained contract obligations related to coal plant closures, a situation that resulted in Standard & Poor’s downgrading its bond rating last summer. The company’s 2016 annual report noted that, “as competitive energy markets continued to devalue baseload coal and nuclear generation, we announced our intention to exit these markets and transition to a fully regulated company.” In doing so, the company has acknowledged its inability to remain profitable in the competitive generation business and is making a desperate transition to a regulated company in which rates would be set by the state instead of competition, likely passing increased costs onto customers.

Instead of taking proactive steps to address the foreseeable misalignment of FirstEnergy’s current product with future demand, the company has aggressively supported counterproductive initiatives as a means to cling to its traditional reliance on coal. FirstEnergy tried (and failed) to obtain an emergency moratorium to avoid its coal plant closures, invoking a little-known section of the U.S. Federal Power Act that allows the U.S. Department of Energy (DOE) to temporarily intervene when the nation’s electricity supply is threatened by an emergency, such as war or natural disaster. Among other measures, such designation would temporarily exempt power plants from environmental laws. Additionally, the company is a vocal supporter of the DOE’s new proposed rule that would provide a coal and nuclear bailout plan that contradicts the DOE’s own report on grid reliability and resilience from earlier this year.

As we re-file our proposalAs You Sow urges FirstEnergy and companies like it to wake up to the realities of current and coming energy markets, to break through the cloud of inertia, and to take meaningful action to lead the transition to a low carbon future. The long-term sustainability of their business model and our planet both depend on it.