News and Analysis
Regulatory approvals are underway for the construction of the NEXUS interstate pipeline. The project will transport gas from Marcellus and Utica regions to markets including Michigan and Ontario, Canada. Since natural gas is a regional commodity, these types of projects can provide energy pricing stability to the entire region.
For months, an Ohio distribution utility company, FirstEnergy, has sought permission from state regulators to charge customers a rider to use to purchase power from a FirstEnergy subsidiary, FirstEnergy Solutions, for a long-term power purchase agreement. If approved, the utility’s application would mean the monopoly distribution utility would lock in a long-term contract for its unregulated subsidiary that was not competitively sourced.
In reporting on the hearings, Cleveland Plain Dealer reporter John Funk cited this FirstEnergy witness testimony: “… customers also would be on the hook for about half of any improvements or upgrades FirstEnergy Solutions makes at the plants — including a rate of return of just over 11 percent.”
The OMA Energy Group is a party to the case at the PUCO and opposes the anti-free market scheme.
PJM just completed its base residual action for delivery year 2018/19. It is PJM’s first auction under its new “Capacity Performance” rules. Prices in the Ohio region of PJM went up 37% to $164.77/MW-day.
The auction procured 166,837 MW of capacity for delivery year 2018/19, giving the region a 19.8% reserve margin, well above the target of 15.7%.
The auction, which ran from August 10-14, also resulted in 3,500 MW of new capacity, most of it gas-fired. RTO Insider reports that UBS Global speculates that three of the combined cycle gas plants clearing the auction are plants proposed in Ohio: Advanced Power’s 700-MW unit in Carroll County, Ohio; Clean Energy Future’s 800-MW facility in Lordstown, Ohio; and the 550-MW NTE Energy unit in Middletown, Ohio.
Since 1981, the University of Dayton Industrial Assessment Center (UD-IAC) has helped more than 900 facilities reduce energy costs and increase competitiveness by providing no-cost energy assessments to eligible manufacturers.
During these one-day assessments, a team of faculty and graduate students trained in industrial energy efficiency work with plant personnel to identify energy saving opportunities. Following the assessment, a customized report with detailed recommendations is developed and delivered within two to four weeks.
UD-IAC energy assessments have cost-effectively reduced annual utility costs for the most recent 25 participating manufacturers by about 13%. Qualifying facilities spend between $100,000 and $2.5 million on energy annually.
OMA’s Energy Efficiency Peer Network (EEPN) is scheduled to tour OMA member Crown Battery‘s manufacturing plant in Fremont, Ohio, on Wednesday, September 16th. The tour will allow participants to observe the many energy efficiency projects Crown Battery has undertaken and learn how the company is incorporating energy efficiency into its culture. The tour begins at 9:30 a.m., followed by lunch at noon.
Please email OMA’s energy engineer John Seryak to hold your spot or receive more details. OMA manufacturing members are invited.
Discussing the context of pending rate cases of FirstEnergy and AEP-Ohio with Columbus Business First reporter Tom Knox, Public Utilities Commission of Ohio (PUCO) chairman Andre Porter sent an unusually blunt message to the utilities: “Stop trying to scare Ohioans.”
Both companies have asked the commission to require customers to subsidize operations of uneconomic power plants. FirstEnergy, in particular, has raised the specter of power failures should the commission not give it what it wants.
Knox quotes the chairman as saying Ohio should “stay the course.” He said: “I think things are going to be fine here in the state of Ohio. I know that sometimes it seems as if there are folks who want to attempt to scare Ohioans, but that’s not what we need to do. Let’s stop attempting to scare Ohioans.”
The OMA Energy Group opposes the two utilities’ plans, yet aims for a future when the power companies are vibrant and innovative suppliers to manufacturing.
OSU economist Ned Hill, on behalf of the OMA Energy Group, this week presented additional testimony on the FirstEnergy rate case pending before the Public Utilities Commission of Ohio (PUCO). In the case, FirstEnergy seeks to escape business risk, shifting that risk to customers, of operating two uneconomical generating plants.
Hill testified: “The Supplemental Stipulations are not in the public interest for two reasons. First, they adopt a scheme that will provide one certified retail electric supplier in Ohio with a competitive advantage in the Ohio market as its uneconomic generating plants will be subsidized by the Companies’ ratepayers through approval of the Economic Stability Program and associated power purchase agreement (PPA).
Second, the Supplemental Stipulations and the PPA will deter entry into the power generation portion of the market by new competitors. Typically, if a market participant cannot compete in a competitive market, it will fail. Subsidizing an existing market participant in the hope that it may be able to compete at some point in the future is not in the public interest, nor is it good public policy. It will only deter entry and keep prices higher than they would be in a competitive market. The PPA can best be described as a coin-flip bet that FirstEnergy Corp. is making, one where it’s “heads I win and tails you lose.”
On July 22, 2015, the Public Utilities Commission of Ohio (PUCO) released “Ohio Long Term Forecast of Energy Requirements.” Under Ohio Revised Code, the PUCO is required to estimate state and regional energy needs over a five-, ten- and twenty-year period. The findings are then submitted in a report to the Governor’s Office and General Assembly, identifying emerging trends related to energy supply and demand and the costs of energy to consumers, specifying anticipated energy needs.
Here are highlights from the report, summarized by OMA Connections Partner, Bricker & Eckler LLP.
The U.S. Environmental Protection Agency (EPA) this week released one of the most expensive and far-reaching rules in its history when it rolled out the Clean Power Plan, designed to regulate carbon emissions from the electric power sector. The rule represents an unprecedented intrusion into affairs of the states that will increase costs for small businesses, manufacturers, and households while threatening electric reliability.
The OMA stands in opposition to this plan alongside business leaders from more than 170 organizations and trade associations in the Partnership for a Better Energy Future (PBEF). PBEF will continue to explore every possible remedy to make sure greenhouse gas (GHG) regulatory actions do not cost American jobs and hurt the U.S. economy.
The plan is expected to have a negligible impact on global GHG emissions, and may not reduce them at all, instead moving emissions to other countries that have not implemented similar restrictions, such as China and India.
The proposal includes numerous changes from the rule that was first proposed in June 2014. At the outset, however, it is clear that the numerous fundamental problems with rule not only remain, but have been exacerbated by the Obama administration’s decision to make national emissions limits even more stringent. OMA, through PBEF, is committed to working through all available means to deflect the serious economic harms from this sweeping regulation.
The Partnership for a Better Energy Future is a coalition of stakeholders representing nearly every segment of the U.S. economy, unified in our support for responsible energy regulations. The Partnership’s fundamental mission is to ensure the continued availability of reliable and affordable energy for American families and businesses.
The law firm of Sidley Austin LLP has compiled this PowerPoint presentation which provides an overview, timing, and elements of the landmark greenhouse emissions reduction plan, Clean Power Plan, proposed by U.S. EPA.
Detail includes a state by state graphic of the 2030 emission goal and a state specific illustration of the difference between the emission reduction target originally proposed and the higher final proposed goal.