News and Analysis
State Rep. Mark Romanchuk (R-Mansfield) presented sponsor testimony for House Bill 247 this week to a packed session of the House Public Utilities Committee. The bill would reform statutes that have led to huge above-market electricity costs for Ohio consumers.
“House Bill 247 is pro-consumer, pro-business, and pro-markets,” Rep. Romanchuk said. “It creates an environment conducive to continued business investment, economic growth and job creation.”
The OMA and a coalition of consumer groups support the legislation that would: 1) Enable customers to obtain refunds of utility charges that have been collected from customers, if the Supreme Court of Ohio finds the charges to be improper, 2) Eliminate “electric security plans” that enable utilities to charge customers above-market prices for electricity generation, and 3) Clarify in the law that utilities and their affiliate organizations cannot own generation and, therefore, cannot layer generation-related charges on consumers’ electric bills.
Here is the coalition’s summary of the bill.
Contact OMA’s Ryan Augsburger to learn how you can support the effort. 6/22/2017
Without any debate, members of the Ohio Senate Finance Committee this week adopted an omnibus amendment in the state budget bill that included a provision that would give electric utilities yet another path to obtain consumer-paid subsidies. This time it is for protecting their credit ratings.
The OMA with the Office of Ohio’s Consumers’ Counsel and other business and consumer groups filed this letter of opposition with the members of the state budget conference committee, explaining that: “… the language reverses rulings of the Ohio Supreme Court, that last year overturned PUCO decisions allowing utility charges to customers for financial stability for electric utilities … and the Senate language could interfere with customer appeals now pending in the Ohio Supreme Court, to protect Ohioans from electric rate increases. ”
Here is an analysis of the provision by OMA energy counsel, Kim Bojko, of Carpenter Lipps & Leland. She concludes: “The utilities continue to ask for more customer-paid subsidies due to an alleged fiscal crisis due to their parent company or affiliates’ bad business decisions. Once again the utilities are asking customers to bail them out, seeking to shift ordinary business risk from shareholders to ratepayers.” 6/21/2017
As the General Assembly approaches summer recess, utilities are lobbying strenuously to pass a law that would force customers of multiple utilities to subsidize two unprofitable power plants, one in southern Ohio and one in Indiana. These power plants are owned by a coalition of utilities known as the Ohio Valley Energy Corporation (OVEC).
OMA Energy Counsel Kim Bojko, of Carpenter Lipps & Leland, testified on behalf of OMA before the Senate Public Utilities Committee about the bill’s potential negative impact on the competitive energy markets, customers’ energy costs, manufacturing competitiveness, and job creation in our state.
In in a joint communication with AARP-Ohio, Ohio Office of the Consumers’ Counsel and Northeast Ohio Public Energy Council (NOPEC), OMA documented concerns to lawmakers saying Ohioans “will pay at least $104 million, and as much as $256 million (or more), per year in rate increases for decades if this legislation is passed.”
Here is an OMA white paper that describes the problematic legislation. 6/14/2017
Utilities seek another set of very expensive subsidies in the legislature, this time in the name of “national security.” Their proposal, embodied in HB 239 and SB 155, would funnel upwards of $300 million more per year, indefinitely, to the utilities.
Ohio’s investor-owned electric utilities are part owners of the Ohio Valley Electric Corporation (OVEC) power plants. OVEC owns and operates two electricity generating complexes: Kyger Creek Power Plant, near Gallipolis, Ohio, and Clifty Creek Power Plant, near Madison, Indiana.
OVEC was formed in the early 1950s by investor-owned utilities to generate electricity to meet the substantial electric power requirements of the uranium enrichment facilities then under construction by the Atomic Energy Commission (AEC) just south of Piketon, Ohio.
The Piketon nuclear enrichment site was opened in 1952 and closed on September 30, 2006. The utilities were notified in 2000 that the contract with Piketon would be canceled. The contract terminated in 2003. The two plants ran at, or less than half of, full load in 2016.
Meanwhile, the utilities have already been paid transition revenues for these and other plants, collected from customers, to help transition to a fully competitive generation market. The utilities, thus, are seeking to be paid again for the same plants.
Read more in this OMA white paper. 6/8/2017
The OMA presented opponent testimony this week on Senate Bill 128 and its proposed multi-billion-dollar bailout of FirstEnergy’s uneconomic, uncompetitive nuclear power plants in Ohio. The testimony was presented by Anthony Smith, Energy Coordinator at Cooper Tire & Rubber Company, and a member of the board of the OMA Energy Group.
Smith stated: “Senate Bill 128 would cost FirstEnergy’s customers an estimated $300 million a year, for up to 16 years, to subsidize two Ohio nuclear power plants operated by FirstEnergy’s subsidiary, FirstEnergy Solutions. That adds up to $4.8 billion.” 6/8/2017
PJM recently completed its auction for electric capacity resources for the 2020/21 delivery year. PJM’s capacity auctions procure, and pay for, future electric resources to ensure the grid can meet power needs on peak days.
This was the first auction in which PJM procured 100% “Capacity Performance” resources, a program intended to improve power plant performance and grid reliability in the wake of the “Polar Vortex” several years ago.
Prices for capacity dropped from about $100/MW-day to $76.53/MW-day.
Even with dropping prices and higher performance standards, PJM’s reserve margin – the amount of extra electric generating capacity available at peak times – rose to 23.3%.
Duke Energy Ohio customers will see a slight increase in capacity prices in 2020/21, though, to $130/MW-day. This higher, local capacity auction price is meant to create an incentive for building new power plants and transmission lines, or load reduction.
A similar price increase in FirstEnergy territory in previous years attracted new resources and prices eventually subsided.
The capacity auction had a slight increase in energy efficiency resources, including increases from all four Ohio investor-owned utilities, though there were fewer demand response resources bid in. 5/30/2017
OMA and a diverse coalition of pro-competition consumer organizations announced support for electricity ratemaking reform legislation (HB 247), sponsored by Rep. Mark Romanchuk (R-Ontario) and introduced this week in the Ohio General Assembly. The bill would fix statutory provisions that have cost electricity consumers billions of dollars in above-market charges.
AARP Ohio (AARP), Northeast Ohio Public Energy Council (NOPEC), Office of the Ohio Consumers’ Counsel (OCC), and the Ohio Farm Bureau Federation (OFBF) joined OMA in applauding the legislation, which will address anti-consumer provisions that date back to the implementation of Senate Bill 221 in 2008.
Three major reforms in the bill are: (1) Elimination of “electric security plans” that enable utilities to charge customers above-market prices for electricity generation; (2) Enable customers to obtain refunds of utility charges that have been collected from customers, if the Supreme Court of Ohio finds the charges to be improper; and (3) Clarify in the law that utilities and their affiliate organizations cannot own generation and, therefore, cannot layer generation-related charges on consumers’ electric bills.
OMA president Eric Burkland said: “Enactment of HB 247 will help protect manufacturers from unwarranted, anti-competitive, above-market charges imposed by electric utilities. The major provisions of HB 247 will help protect the billions of dollars of savings that customers have realized thanks to Ohio’s competitive market for electricity. Continued savings will spur economic growth, attract new business investment from manufacturers, and benefit the communities where they operate.”
Lawmakers in both the House and Senate this week introduced identical legislation to bail out uneconomic power plants affiliated with the Ohio Valley Electric Corporation (OVEC), which is owned by a consortium of utilities.
House Bill 239 is sponsored by Reps. Ryan Smith (R-Bidwell) and Rick Carfagna (Genoa Township). Senate Bill 155 is sponsored by Senators Lou Terhar (R-Green Township) and Bob Peterson (R-Washington Court House).
The house bill immediately received a hearing signaling that the bill has been fast-tracked. The bill sponsors justified the subsidies to the unprofitable power plants in Ohio and Indiana “to preserve a national security generation resource”; the plants at one time served the now closed uranium enrichment facility in Piketon.
The customer cost of the subsidy is not yet available. The OMA is reviewing the legislation. 5/25/2017
Hill stated: “All of the (investor owned utilities) share two goals. The first is to use the power of either the PUCO or the Ohio Legislature to mandate the purchase of expensive existing Ohio power plants first and to ensure that competitive market forces do not force them to either write down the asset-value of their generating assets, protecting their stock values, or to close the plants. The second is to upend, circumvent, and destroy the competitive electricity generating market managed by PJM Interconnect.”
With regard to the massive subsidies proposed by the bill, he said: “Keeping expensive and technically obsolete nuclear power plants in subsidized operation will be a barrier to lower-cost, lower-carbon electricity production.”
The day after this week’s hearing, the chairman of the House Public Utilities Committee, Rep. Bill Seitz, announced that hearings on the measure will be suspended for now. 5/18/2017
Public Utilities Commission of Ohio (PUCO) Commissioner Beth Trombold came to the OMA to talk about the commission’s initiative “PowerForward.”
PowerForward focuses on the grid of the future, and how to optimize deployment of new and emerging technologies. The commission has scheduled a series of meetings for input from expertise in multiple fields. 5/18/2017
Pictured: M. Beth Trombold, PUCO Commissioner, and OMA Energy Committee Chairman, Brad Belden, VP Administrative Services, The Belden Brick Co.