News and Analysis
Belden: PPAs are Regulatory Taxation
March 25, 2016The Canton Repository published an op-ed this week from OMA Energy Group Chairman Brad Belden, Director, Support Services, The Belden Brick Company, the largest family-owned and operated brick company in America. He warned of “regulatory taxation” by the Public Utilities Commission of Ohio.
Belden wrote of the riders proposed in the AEP and FirstEnergy “purchase power agreement” (PPA) cases: “We estimate that Belden Brick’s share of the additional costs of this new rider to approach $1 million over the eight-year term of the agreement. The construction industry is still feeling the effects of the real estate collapse of several years ago, and our company is still struggling to turn a profit. Belden Brick did not have the government to turn to during this recent downturn. AEP and FirstEnergy should not have this option either …”
He said: “The markets for electricity in Ohio have been working to the benefit of consumers, but these proposed deals are a massive setback to the consumer-friendly efficiency of those markets. The impact would surely be felt by our employees and shareholders. Since Ohio deregulated its utilities, we have been able to shop for the best price on electricity generation, and that has helped keep costs down. … Lower energy prices mean more money to invest back into the business, into employee salaries and our community. That’s how the American free market works.”
DP&L Proposes New Rate Plan to PUCO
March 4, 2016Dayton Power & Light (DP&L) filed its electric security plan this week. The proposal seeks, among other things, a ten-year power purchase agreement (PPA) with its generating affiliate, to be funded by a Reliable Electricity Rider. The proposal also includes a Distribution Investment Rider and a Clean Energy Rider.
DP&L maintains that the Reliable Electricity Rider is needed “to promote the reliability of electric supply and the stability and growth of Ohio’s economy” and is consistent with the criteria used by the Public Utilities Commission of Ohio to evaluate AEP’s PPA rider proposal.
The OMA Energy Group will be intervening in the case to protect manufacturing competitiveness.
OMA Files at FERC to Stop Market-Damaging Subsidies
February 26, 2016This week, the OMA Energy Group filed in a complaint before the Federal Energy Regulatory Commission (FERC) to protect manufacturers and other consumers from abuses in the FirstEnergy and AEP affiliate power purchase agreement cases pending before the Public Utilities Commission of Ohio (PUCO).
The OMA Energy Group wrote that the FirstEnergy proposal will cost consumers $3 billion, the AEP proposal will cost $2 billion, and both will undermine Ohio manufacturing competititveness and chill investments in the Ohio markets.
The Energy Group stated that the proposal will harm competition in regional wholesale markets, distort wholesale price signals, and deter market entry by competitive electricity suppliers.
The group also noted that evidence in the case clearly shows that retail electricity competition is working, retail rates are not subject to volatility, and that resource adequacy exists in the PJM region.
Commentary: Would FirstEnergy and AEP Rate Plans be Good for Consumers? No
February 19, 2016Dr. Ned Hill, Professor of Public Affairs and City & Regional Planning at The John Glenn College of Public Affairs at The Ohio State University, is a frequent consultant to the OMA on a wide variety of manufacturing competitive issues.
Here he is on the record in a Columbus Dispatch op-ed about the Power Purchase Agreements proposed to the Public Utilities Commission of Ohio by AEP and FirstEnergy: “These proposals are about paying above-free-market rates for about 30 percent of the electricity AEP and FirstEnergy generate in Ohio. And, the proposals will transfer all of the business risk in operating these units from the companies’ stockholders and management to all electricity users in their territories—even if they are not customers of the utility.”
PPA Case Proponents & Opponents Take to Airwaves
February 19, 2016The battle continues in the media while the Public Utilities Commission of Ohio (PUCO) evaluates proposed FirstEnergy and AEP Power Purchase Agreement (PPA) case settlements.
Here are TV/radio spots in which the Alliance for Energy Choice, a group of independent power producers, takes some pokes at the utilities’ requests for guaranteed profits.
Here is FirstEnergy’s comeback. And AEP’s.
SCOTUS Delays Clean Power Plan
February 12, 2016The Supreme Court of the United States (SCOTUS) this week granted a stay of the Obama administration’s Clean Power Plan (CPP) regulation of greenhouse gas (GHG) emissions from the electric utility sector. This decision delays the implementation of the rule until the courts have the opportunity to determine the plan’s legality.
The case against the plan is pending before the D.C. Circuit Court, where arguments will be heard June 2. A decision is possible in 2016, but might not be made until 2017.
Meanwhile, there is some legal question about whether the state implementation deadlines (the first is September of this year) are tolled until a final legal resolution is achieved. Read more on that here.
Manufacturers Oppose Subsidies for Utilities
February 12, 2016ArcelorMittal, Whirlpool, BASF, William Sopko & Sons Co., Summitville Tiles, The Belden Brick Co., Cooper Tire & Rubber Co., and Sheoga Hardwood Flooring and Paneling Co. were among companies that sent a letter to the PUCO urging it to reject a request by AEP and FirstEnergy that would raise electric rates for up to eight years to subsidize some of their inefficient power plants.
The Cleveland Plain Dealer summarized the arguments made by these industry leaders.
Concerned manufacturers should send a letter to the PUCO to convey your opposition to the bad deals. This alert will give you tips on how to calculate your potential costs and file your letter.
New Study, Same Result: FE Plan Would Cost $4B
February 12, 2016A new study by the Institute for Energy Economics & Financial Analysis (IEEFA) has analyzed the effects of FirstEnergy’s proposal to utility regulators to allow it to pass long-term costs and risks of three aging coal-fired plants and one aging nuclear plant onto captive customers of the utility.
The report finds that: “FirstEnergy is using greatly inflated forecasts of future natural gas prices and PJM electricity market prices to justify its proposal.”
And, “FirstEnergy’s proposal—under an uninflated, reasonable natural gas price outlook—would in truth result in a net cost to ratepayers of approximately $4 billion, rather than the net $561 million gain that the company promises.
“IEEFA concludes that FirstEnergy proposal is a bad deal for Ohio customers and would lock Ohio into subsidizing the continued operation of aging and uneconomic power plants while hindering opportunities for lower cost and cleaner energy resources that could provide jobs and significant economic benefits for the state.”
IEEFA proposes: “…. rather than propping up these struggling plants, Ohio policymakers work instead for an orderly transition away from outmoded energy generation by supporting the
development of cleaner, modern and more efficient resources.”
OMA Energy Efficiency Peer Network Kicks Off 2016 Programming
February 12, 2016The OMA Energy Efficiency Peer Network (EEPN) is gearing up for 2016, and will include: plant tours, peer-learning webinars, do-it-yourself tools, and up to 3 hours of no-charge technical assistance & consulting. The EEPN is open to all manufacturing members of the OMA at no charge.
The first EEPN event is a plant tour on Friday, March 18 at F&P America, an ISO/TS-16949 and ISO 14001 Certified Tier-One International Automotive Systems Supplier in Troy, Ohio. (Max. of 20 participants; no direct competitors.)
Join the EEPN to get all event invitations. Questions? Contact OMA’s energy engineer, John Seryak.
PJM and its Market Monitor: AEP Proposal Will Hurt Customers and Investment
February 5, 2016PJM, the regional transmission organization (RTO) and administrator of the wholesale power markets in Ohio this week filed a post-hearing brief expressing concerns about the negative effects on electricity markets of AEP’ s power purchase agreement (PPA) case pending before the Public Utilities Commission of Ohio (PUCO).
PJM said of its reason for filing, “(Addressing faults in the proposal) is critical in order to send the right signal as to Ohio’s interest in attracting competitive generation to meet the state’s future economic development needs. Silence on this issue will only make it harder for investors in new generation to view Ohio as a place where their investment is welcome and can compete fairly with existing legacy generation of the sort covered by the Stipulation.”
As to the claim that system reliability will be threatened if the PPA is not approved, PJM wrote, “There has been significant new generation entry that, combined with demand response and imports within PJM’s capacity import limit, has consistently kept PJM’s reserve margins on target. Indeed, as various witnesses noted, there are several substantial new plants under construction or proposed for Ohio.”
PJM Independent Market Monitor Dr. Joseph Bowring also filed a brief, in which he stated, “The purpose of the PPA Rider is to transfer the costs and market risks associated with the PPA Rider Units from AEP’s shareholders to AEP’s ratepayers. AEP has not demonstrated and cannot demonstrate why customers should bear these costs and take these risks, if a well-informed generation owner is not willing to do so.”