Energy Management

Manufacturers: ‘Goldplating’ is Increasing Electricity Costs

At their meeting this week, members of the OMA Energy Committee heard a presentation by Anthony Smith and Tim Ling. Smith is Global Energy Coordinator at Cooper Tire and Rubber Company. Ling is Corporate Environmental Director at Plaskolite, LLC. The duo are heavily involved in energy policy and serve as board members of the OMA Energy Group.

They detailed the growth of electric distribution and transmission charges at a time when generation charges have been decreasing. They also described how much subsidy is now included in customers’ bills. And, they described how utilities are aggressively charging more for transmission under the guise of grid modernization.

Their conclusions about ‘goldplating’ are validated in this recent USA Today article that describes utility overspending. 3/14/2019

Government Objects to FirstEnergy Deal

In a report on complex bankruptcy court proceedings, business reporter John Funk of the Cleveland Plain Dealer describes how FirstEnergy Solutions’ (FES) restructuring plan has hit a roadblock with federal agencies.

FES is the bankrupt affiliate of Akron-based FirstEnergy Corp. (FE). Total FES debt is about $3.6 billion according to the story. The company filed for bankruptcy protection one year ago and has fashioned a settlement with creditors. A growing army of federal and state agencies now says the settlement agreement violates the law.

“The U.S. Securities and Exchange Commission, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, the U.S. Environmental Protection Agency and the federal bankruptcy court’s U.S. Trustee all have filed lengthy and strongly worded objections to a restructuring plan the company rolled out Tuesday. They also found the FES restructuring plan short on detail and silent on how much it would cost to clean up the environment if the coal and nuclear plants are closed,” according to the story.

“Federal attorneys for the NRC and U.S. EPA, working with lawyers for Ohio and Pennsylvania, argue that FirstEnergy itself has significant independent liability to the government under environmental laws. They contend that terms of the restructuring agreement that let FE off the hook are illegal.” 3/14/2019

Ohio Shale Oil & Gas Production Up and Up

This week the Ohio Department of Natural Resources (ODNR) released its fourth quarter 2018 natural gas and oil production report.

During the fourth quarter of 2018, Ohio’s horizontal shale wells produced 5,810,484 barrels of oil and 663,534,323 Mcf (663 billion cubic feet) of natural gas.

Natural gas production from the fourth quarter of 2018 showed a 31.89 percent increase over the fourth quarter of 2017, while oil production increased 38.56 percent for the same period. Wow!

Here’s a good visual from Richard Simmers, Chief, ODNR Division of Oil and Gas Resources Management, showing the growth story of oil and gas production in Ohio’s Utica shale play. 3/14/2019

Nuke Retirement Impact Study Flawed

In April 2018, The Brattle Group published a report on the impact of announced nuclear retirements in Ohio and Pennsylvania. This report was published after FirstEnergy Solutions made an appeal to the U.S. Department of Energy for subsidies for the plants and after FirstEnergy Solutions filed for Chapter 11 bankruptcy. In this report, the authors outline reasons that they believe justify state and/or federal subsidies to continue operating uneconomic nuclear power plants in Ohio and Pennsylvania.

This report is being used by proponents of a bailout of the economically failing nuclear plants. Unfortunately, the report is analytically flawed.

The report does not in any way address what the potential cost of a state and/or federal nuclear subsidy to ratepayers would be, so that a cost/benefit analysis cannot be made.

The report fails to recognize the operation of competitive markets for electricity; the report makes the assumption that should these plants retire, the markets in which they operate will not respond accordingly. That is, it assumes that no individual power producer would see an opportunity in increased capacity costs to develop new renewable energy products.

The report ignores the value of competitive markets to provide the most efficient price of electricity for consumers.

And, the report supports a technology over a technology-neutral regulatory system that has served Ohioans for nearly a decade.

Read more. 2/28/2019

MIT Professors Stump for Nuclear Power Plant Bailout

Appearing before the members of the House Energy and Natural Resources Committee this week, a pair of Massachusetts Institute of Technology (MIT) faculty members provided a presentation on the low-carbon benefits derived from nuclear power.

While their testimony was not related to any specific legislative proposal, it was likely intended as context for anticipated legislation to bailout Ohio’s two nuclear power plants owned and operated by FirstEnergy subsidiaries.

The two-year MIT study, “The Future of Nuclear Energy in a Carbon-Constrained World,” takes looks at the U.S. landscape and the stalled nuclear energy capacity growth. It outlines new policy measures to potentially reverse that trend, but the study did not include an examination of the state of Ohio or its zero-emissions nuclear proposals from the last General Assembly.

Among the recommendations to policymakers: “decarbonization policies should create a level playing field that allows all low-carbon generation technologies to compete on their merits.” This, of course, is not what the various bailout proposals would do. 2/28/2019

AEP to Buy Renewable Energy with Shareholder Money

In mid-February AEP Ohio’s parent company, American Electric Power, announced that its unregulated subsidiary would invest over a billion shareholder dollars to acquire renewable energy that the company believes will provide additional shareholder value. The announcement is in contrast to AEP Ohio’s regulatory proposal pending at the PUCO which would force all AEP customers to subsidize a similar investment on the regulated-side, shifting risk from shareholders to its customers.

“If AEP Ohio wants to build new generation, the company’s shareholders – not its customers – should be doing the investing and taking on the risk. We are glad to see they are now doing that and expect they will discontinue efforts to ask the PUCO to approve their filing that would make customers foot the bill to develop renewable generation in Ohio,” said Bradley Belden, President, The Belden Brick Company, and chair of the OMA Energy Group. 2/28/2019

Duke Customers: Look for a Credit

This week the PUCO authorized Duke Energy Ohio to establish a credit on electric customer bills to reflect the Tax Cuts and Jobs Act (TCJA) of 2017 into its rates. Here are the details.

This action settles the issue for three out of four of Ohio’s regulated-electric utilities, while the fourth is in the settlement process.

The OMA Energy Group intervened in these proceedings in order to ensure that members’ interests are protected and that the full benefit of the TCJA is passed back to customers, as required by law. 2/21/2019

Lawmakers Named to Energy Committees

With the announcement of legislative committee assignments this week, it becomes evident which state representatives and senators will be most involved in crafting anticipated electricity-pricing legislation.

Senator Steve Wilson will chair the Senate Energy and Public Utilities Committee. In the House, Rep. Nino Vitale will chair the Energy and Natural Resources Committee and Rep. Jamie Callender will chair the Public Utilities Committee. 2/14/2019

Legislators Telegraph Intentions on Power Plant Bailouts

During inaugural meetings of standing House committees this week, we got a glimpse of what is coming down the pike. Statehouse observers believe a legislative proposal is forthcoming that would bailout the uneconomic nuclear power plants in Lake and Ottawa Counties.

Lawmakers on three separate House panels will likely touch the proposal. Rep Dick Stein (R-Norwalk) and Rep. Michael O’Brien (D-Warren) co-chair a subcommittee on Energy Generation. The pair confirmed that preserving the nuclear power plants is a priority. Rep. Stein also expressed support for molten salt, thorium nuclear reactors.

House Energy Committee Chair Nino Vitale (R-Urbana) was quoted in Statehouse news media as saying, “We seriously have to look at generation and the mix of what Ohio’s doing.” And, “We’ve had some brownout situations. We’ve had some issues with PJM Interconnection in terms of how we’re putting energy into that. One of the key issues for our state is if we’re an energy producer it helps attract business to the state because our rates will be lower and it also helps your average citizen.”

Meanwhile, House Public Utilities Committee Chair Jamie Callender (R-Concord) indicated that nuclear bailout legislation could come to his committee or to the Energy & Natural Resources Committee, and that wind setbacks will also be a likely subject for legislative reform. In an interview following the committee meeting, he expressed concern that Ohio doesn’t produce enough power to meet its own needs while conceding the region enjoys a surplus of electricity. 2/14/2019

PUCO Chairman Haque Steps Down

This week PUCO Chairman Asim Haque submitted his letter of resignation to Governor DeWine.

In a PUCO press release that included a list of Haque’s significant accomplishments, Haque said: “I would not be doing this experience, nor my feelings about public service to this state any justice by expressing the common refrain of being “honored” to have served. It is of course true that I am deeply honored to have served. I think, however, it is more revealing, more personal for me to say that this experience has been an absolute dream. …”

Haque described his next position: “… I have accepted a job with PJM Interconnection in suburban Philadelphia. It is the regional transmission organization and wholesale market operator for thirteen states (including Ohio) and the District of Columbia. Its mission is similar to that of the PUCO’s, as PJM is tasked with providing reliable power at least cost to a large footprint in this country. …” 2/4/2019