News and Analysis
This week the OMA continued its opposition to a FirstEnergy customer rider, “distribution modernization rider or DMR,” by asking the Supreme Court of Ohio to stop the collection of the charge from customers during the pendency of its appeal.
In approving the DMR in 2016 over strong customer opposition, the PUCO awarded FirstEnergy a $132.5 million (plus taxes) customer-paid annual windfall with virtually no strings attached on how it must be spent. With taxes, FirstEnergy is currently collecting $168 million annually from customers.
The PUCO in December responded to a request from the Office of the Ohio Consumers’ Counsel (OCC), the state’s residential consumer advocate, to investigate where the money is going by opening a case.
According to an article in Energy News Network, through the opened investigation, OCC has been attempting to gain information from FirstEnergy about how the rider proceeds are being spent. FirstEnergy has refused to comply with OCC’s discovery requests.
What makes it particularly onerous for business and residential customers to pay the rider is that it was awarded to prop up FirstEnergy’s underwater generation affiliate company, FirstEnergy Solutions (FES). Now that FES is bankrupt the justification by the PUCO to boost the company’s credit becomes even weaker. 8/2/2018
The Ohio Department of Natural Resources (ODNR) recently released its summary of 2018 Q1 natural gas and oil production.
According to ODNR, “During the first quarter of 2018, Ohio’s horizontal shale wells produced 3,942,251 barrels of oil and 531,291,017 Mcf (531 billion cubic feet) of natural gas” and “natural gas production from the first quarter of 2018 showed an 42.85% increase over the first quarter of 2017, while oil production decreased by 3.6% for the same period.”
E&E News reported that energy analyst Taylor Robinson describes the economic potential of the vast amount of “wet” natural gas in the shale rocks of Appalachia’s Ohio River region as “Rich, rich, rich, rich.” 7/26/2018
A new report by the Brattle Group, an economic analysis consultancy, looked at the U.S. Department of Energy’s (DOE) proposal to require customers to prop up uneconomic coal and nuclear power plants. It found that customers could be forced to subsidize the money-losing power plants to the tune of $34 billion, or higher.
According to the report, the DOE bailout order could cost customers as much as $70 billion “if power plant owners were also granted a return on their invested capital in addition to payments for operating shortfalls.”
The report was commissioned by industry associations including American Petroleum Institute (API), Advanced Energy Economy (AEE), American Wind Energy Association (AWEA), Electricity Consumers Resource Council (ELCON), Electric Power Supply Association (EPSA), and Natural Gas Supply Association (NGSA).
The OMA has been a steadfast opponent of state and federal bailouts for uneconomic power plants.
Members of the OMA Energy Group will be able to access custom cost impact assessments as more data become available.
All members are invited to attend the OMA Energy Committee meeting on August 15 at Owens-Illinois, Inc. in Perrysburg, Ohio. Register here. 7/26/2018
Due to member request for more regional meetings, the upcoming meeting of the OMA Energy Committee will be held in Perrysburg on Wednesday, August 15 from 10:00 a.m. until 1:00 p.m.
This special regional meeting will be held at glass manufacturer Owens-Illinois, Inc. (O-I) at its corporate campus.
Lunch is included courtesy of our host, O-I, and a tour will be offered. (Tours require closed-toe shoes (no high heels) and long pants. Safety glasses and ear protection will be provided.)
Topics on the agenda include a special report on wind energy, analysis of state and federal generation plant subsidy proposals, legislative updates, gas and electric pricing trends, and more.
All members are welcome. Please register here or call (800) 662-4463. Registration is required. 7/19/2018
After months of anticipation, the Senate declined to act on House Bill 114, legislation to revise Ohio’s energy standards for renewable energy and energy efficiency.
The bill was amended earlier in the spring by the Senate Energy and Natural Resources Committee to relax Ohio’s restrictive wind farm siting requirements.
Committee Chairman Troy Balderson (R-Zanesville) told statehouse reporters that further amendments need some refinement, but that “this bill is not dead. It’s just not ready for passage out (of committee) today.”
The Senate is now on summer recess and is not expected to be back in session much until after the November election. 7/12/2018
FirstEnergy Solutions (FES) filed a motion to approve bidding procedures – and the ultimate sale – of its retail business.
FES has entered into an asset purchase agreement with Exelon Generation Company, LLC. (Exelon), which is an affiliate of Constellation Energy. The purchase relates to FES’ retail business and includes primarily the purchase of customer contracts that FES has with various customers either directly or through brokers and aggregation programs. The agreement is not for the purchase of FES’ generating plants.
OMA’s energy counsel Kim Bojko of Carpenter Lipps & Leland describes the bidding process in this memo to the OMA Energy Group. She addresses considerations for manufacturers who may presently be in contract with FES for power supply. 7/12/2018
Northeast Ohio Public Energy Council (NOPEC) announced that it is the first organization in Ohio to offer new U.S. Department of Agriculture low-interest loans designed to help small businesses lower their energy consumption and costs through energy-efficient upgrades.
Owners of commercial property within a NOPEC member community are eligible to apply for financing for projects ranging from $5,000 to $100,000.
Energy upgrades that qualify include HVAC, interior and exterior lighting, insulation, windows and doors, and other renewable energy projects such as solar water heating systems.
For larger projects, NOPEC offers financing up to $500,000 through its Property Assessed Clean Energy, or PACE, program. 7/11/2018
From OMA Connections Partner Barnes & Thornburg: “On June 22, 2018, the IRS issued Notice 2018-59, which provides long-awaited guidance relating to the “beginning of construction” requirement for solar projects and other renewable energy projects that qualify for the 30% investment tax credit (ITC) … In addition to solar projects, this notice applies to qualified fuel cells, qualified microturbines, combined heat and power systems (CHP), wind farms using small turbines of 100 kilowatts or less, and geothermal heat pump properties.”
Read more from Barnes & Thornburg here. 7/4/2018
This week the Supreme Court of Ohio heard oral argument in two AEP Ohio cases appealed by the Ohio Consumers’ Counsel (OCC) and The Ohio Manufacturers’ Association (OMA), in which the parties argued that AEP Ohio customer charges associated with its interest in the coal-fired Ohio Valley Electric Corporation (OVEC) are unlawful and violate the General Assembly’s move to electric competition.
The court will consider whether subsidies approved by the Public Utilities Commission of Ohio (PUCO) for AEP Ohio’s stake in OVEC constitute illegal charges in an otherwise deregulated market.
A decision is expected in late 2018 or early 2019. 6/26/2018
Said to be a top priority for the Ohio Senate back in January, House Bill 114, the legislative package to revise the state’s alternative energy requirements, languished until mid-May, at which time, the Senate unveiled numerous changes. As it stands, the pending legislation is a mixed bag for Ohio manufacturers.
Significant controversy has resulted from a Senate amendment to relax the current restrictions governing the siting of wind turbines.
Additionally, a witness for AEP appeared before the Senate Energy and Natural Resources Committee this week to take issue with a provision the Senate included to introduce competition into energy efficiency projects. Currently, all such energy savings programs are administered by one of Ohio’s four monopoly electric distribution utilities. In testimony on June 6, a witness from competitive retail electric supplier IGS appeared to make the case for expanded competition of energy efficiency programs to better benefit customers.
Eyes will be on the Senate next week to see if the committee approves the bill and sends it to the Senate floor before the start of the General Assembly’s summer recess. 6/21/2018