News and Analysis
Yesterday, the U.S. Senate Committee on Energy and Natural Resources held a hearing on President Trump’s plan to bail out failing nuclear and coal plants in the name of national security along with grid reliability and resiliency.
All five Federal Energy Regulatory Commission (FERC) commissioners testified at the hearing. Senators from both parties were skeptical that an anti-competitive bailout was necessary. Committee Chairwoman Lisa Murkowski, a Republican from Alaska, argued that, rather than pursue this type of bailout, FERC “should be pointing the way on grid vulnerabilities, while reaffirming our commitment to competition in wholesale power markets.”
FERC commissioners also expressed varied levels of skepticism related to this plan, with some saying that this kind of government intervention in the market would throw the power markets “into chaos” and another stated that the markets are currently working “hyper-efficiently.” Another commissioner acknowledged the current efficiency, but stated that FERC will remain vigilant and will not assume that its good fortune would continue, noting that he believed portions of the president’s approach had been well-researched and warranted further study.
Chairwoman Murkowski urged the commissioners to lead on this issue and move quickly to determine a policy in the face of pressure from the administration. 6/13/2018
The Trump administration evidently plans to order customers to subsidize unprofitable nuclear and coal power plants owned by FirstEnergy Solutions (FES). The controversial and unprecedented move by the president appears to have been in part the result of a lobbying blitz.
John Funk of the Cleveland Plain Dealer reported that “Akin Gump’s top law partners charged (FES) as much as $1,475 an hour.”
Bottom line: FirstEnergy and FES want someone, anyone – preferably customers or taxpayers – to pay billions to make up for the company’s bad business decisions. 6/14/2018
Late last week Bloomberg News reported that President Trump had ordered Department of Energy Secretary Rick Perry to prevent the retirement of some nuclear and coal power plants.
The move will require customers to subsidize unprofitable power plants that cannot compete in the generation market.
The bailout proposal had been sought by Ohio utility FirstEnergy and its bankrupt affiliate FirstEnergy Solutions, which owns three nuclear power plants and several outdated coal power plants.
The order is unprecedented in its novel usage of national security to justify the bailout.
The OMA has been an active opponent of state and federal power plant subsidies that distort the function of the market.
Manufacturers in the PJM region can expect to see a new charge on power bills that will not offer any benefit to customers or solve a legitimate problem. PJM Interconnection, the grid operator in 13 states, issued this statement.
Here’s a brief summary from OMA energy counsel Carpenter Lipps & Leland. Needless to say, we will keep members posted. 6/7/2018
The good: It eases regulations that limit manufacturers’ ability to site wind turbines on their properties; it makes opt-out from energy standards easier when cost benefits don’t work out; and it maintains (but lessens the targets of) energy efficiency standards and their benefits.
The bad: It allows distribution utilities to “bank savings” under energy efficiency programs, the effect of which will be to increase manufacturers’ bills, and with no benefit at all. 5/31/2018
In good news for manufacturers, the Public Utilities Commission of Ohio (PUCO) rejected legal arguments from the state’s four electric utilities challenging the PUCO’s authority to examine the impacts of the reduction in corporate income tax on utility rates, saying American Electric Power, Dayton Power & Light, Duke Energy and FirstEnergy – and all regulated companies – must continue to set aside all money from the tax cut until plans are made to return funds to customers. 5/31/2018
The OMA’s Sustainability Peer Network will meet in the OMA offices on Tuesday, June 19 from 10:30 a.m. -2:30 p.m., and includes lunch.
The no-charge forum for manufacturers only will provide participants with in-depth peer discussions on two topics of interest to the manufacturing community:
- Emissions reduction tracking and reporting
- Engaging employees on energy reduction
Additionally, leadership from the U.S. Department of Energy (DOE) Better Plants program will share experiences with treasure hunts, in-plant trainings, and continuous energy improvement.
Members of the OMA Energy Committee met in Columbus this week. They discussed pending state legislation with Rep. Bob Cupp (R-Lima), Chair of the House Public Utilities Committee.
Lisa Decoteau, Director of Commodities Management Group, Constellation, presented on the transformative role of shale gas in the global hydrocarbons market and why it matters to Ohio manufacturers. 5/17/2018
Rep. Bob Cupp (R-Lima) (left) addresses the OMA energy committee. Committee chairman, Brad Belden, VP, Administrative Services, The Belden Brick Co., looks on.
Members of the Senate Public Utilities Committee this week unveiled a new version of House Bill 114, legislation to revise energy efficiency and renewable energy portfolio standards.
The new bill incorporates tracking requirements on qualified customers who may opt out of paying the energy-efficiency rider. The bill also contains provisions to relax overly restrictive siting policies governing the placement of commercial scale wind farms.
A vote was expected next week, but may not occur before the summer recess. Click to view a comparison of the Senate revisions. 5/17/2018
According to Bloomberg News this week, Trump administration officials continue to consider a bailout for the unprofitable, nuclear power plants owned by now bankrupt FirstEnergy Services. The source indicates that the administration is now considering using an obscure national defense law from the cold war that was created to help the steel industry to justify the possible action.
OMA members this week discussed possible legal appeals should the bailout be granted. Even though FirstEnergy no longer has an ownership stake in the power plants, the bankruptcy agreement between FirstEnergy and FirstEnergy Services provides a nice bonus to FirstEnergy if it successfully convinces officials in favor of a bailout. 5/17/2018
Oil & Gas Journal recently reported: “FERC granted Rover permission to place a segment of Phase 2, which included Mainline Compressor Station 3 in Crawford County, Ohio, and a section of the line between Mainline Compressor Station 2, in Wayne County, Ohio, and Mainline Compressor Station 3, in service for additional throughput. FERC’s approval allows for the full commercial operation capability of the Market Zone North Segment.
“Phase 1 of the project was also placed into service in segments, with the first portion going into service Aug. 31, 2017, and the remaining segment of Phase 1 going into service in December of 2017. Since December 2017, Rover has been capable of transporting up to 1.7 bcfd of natural gas.
“Rover will transport natural gas from the Marcellus and Utica shale production areas to markets across the US as well as into the Union Gas Dawn Storage Hub in Ontario.”
As a member of the Coalition for the Expansion of Pipeline Infrastructure (CEPI), a partnership of businesses, trade associations and labor groups that support the responsible expansion of critical energy infrastructure across Ohio and the region, OMA applauds this FERC action. 5/9/2018