News and Analysis
OMA members at this week’s OMA Energy Committee decried the actions of Ohio electric utilities that have announced they intend to keep federal tax reform savings rather than passing them on to customers. Monopoly electric distribution utility companies in most states have acted voluntarily to pass the tax savings on to customers.
The Public Utilities Commission of Ohio (PUCO) has opened an investigation into the propriety of Ohio’s utilities passing tax savings along to customers, but Ohio’s investor-owned electric distribution utilities (AEP-Ohio, Duke Energy, FirstEnergy, and Dayton Power & Light) are challenging this PUCO directive.
The OMA Energy Group has intervened to support immediate rate reductions stemming from the tax savings.
Here’s an analysis of the actions taken by other states by OMA energy counsel, Kim Bojko of Carpenter Lipps & Leland, in a memo to the OMA Energy Group.
Cleveland Plain Dealer energy reporter John Funk reports that FirstEnergy says a major reduction in the company’s overall delivery rates or a refund of money to customers to reflect the new 21 percent federal tax rate is out of the question. 3/1/2018
At its quarterly meeting this week, the OMA Energy Committee heard gas and electricity energy market forecasts.
This from Speaker Paul Ryan’s office this week: Recently enacted federal tax reform is resulting in electricity rate reductions in 39 states, but not in Ohio.
Contact your state legislators to ask why.
Read more here. 2/22/2018
During FirstEnergy’s investor call this week, FirstEnergy’s CEO Chuck Jones predicted an imminent bankruptcy of affiliate FirstEnergy Solutions (FES). He also expressed disappointment that state and federal officials have not provided customer-funded subsidies to prop up the company that owns several unprofitable nuclear and coal power plants.
Respected energy industry trade press, RTO Insider reported that Jones remarked that FE has cut ties with FES and that he expects the subsidiary will not survive the winter.
The article quotes Jones as saying, “I’m personally disappointed that the endeavors haven’t resulted in a meaningful legislative or regulatory support, given the importance of these plants to grid resiliency, reliable and affordable power and the region’s economy.” 2/22/2018
The Public Utilities Commission of Ohio (PUCO) recently opened an investigation into whether it should order rate cuts to reflect the federal tax cut, from 35% to 21%, from which Ohio electric utilities are now benefiting. Public utilities commissions in other states are taking similar action, and most utilities appear to be cooperating in the matter. Not in Ohio.
This week, Ohio’s four electric utilities joined together to produce a raft of legal objections to having to set aside revenue for possible refunds. Their objections are rooted in the state’s faulty ratemaking statutes, statutes that need to be reformed, and would be if the legislature would act on HB 247, sponsored by Rep. Mark Romanchuk (R-Mansfield). 2/15/2018
This week the OMA joined a chorus of supporters in offering proponent testimony for House Bill 143, a bill that will prevent the state tax department from collecting kilowatt hour tax on electricity that manufacturers produce onsite by modifying the definition of “electric distribution company” for kilowatt-hour tax purposes.
As manufacturers increasingly utilize renewable energy and other forms of onsite generation, the clarification of tax law that HB 143 provides supports energy innovation and manufacturing competitiveness. 2/15/2018
National and state energy leaders will convene in Columbus March 6-8, and March 20-22 to discuss the electric distribution system of the future and how state policy can facilitate grid enhancements that work to better customers’ lives.
PowerForward takes place at the PUCO’s offices at 180 E. Broad St., Columbus. The event is free to attend and there is no registration required. PowerForward will also broadcast live online by The Ohio Channel. 2/8/2018
Supporters of the proposed bailouts of Ohio’s two nuclear plants seek support from local elected officials based on the impact of potential plant closures.
What’s not been analyzed is the impact of the bailouts on the local economies. So, we took a look at one of the plants.
The bailouts would cost the residents and businesses in Lake County up to $94 million! An economy punishing $94 million. 2/1/2018
OSU economist Ned Hill testified before the House Public Utiltiies Committee this week in support of utility regulation reforms contained in HB 247 (Romanchuk, R-Mansfield).
“The electricity markets are working in Ohio and benefiting consumers and employers, one for electricity generation and the other for capacity. There is no economic rationale for introducing subsidies into the electricity markets; they amount to nothing more than corporate welfare,” Hill said.
These subsidies are paid through non-bypassible riders on customers’ bill; those riders now exceed the cost of transmission or distribution costs for the average mercantile customer. Transmission charges are 8% of the average cost. Distribution charges are 13% of the final cost. And, PUCO approved non-bypassable charges are 14% of the bill. 1/25/2018
This week the Supreme Court of Ohio issued an opinion (case summary) finding that the PUCO cannot order the FirstEnergy power companies to refund $43 million to customers for the “imprudent” purchase of renewable energy credits made in 2010.
“This decision negatively impacts the ability of the PUCO to protect customers against the utilities from collecting imprudent expenditures. The Court’s decision will send shockwaves through the industry, halting rider rate approvals and changing the regulatory paradigm,” wrote OMA energy counsel Kim Bojko of Carpenter Lipps & Leland in a briefing to members of the OMA Energy Group.
The ruling further justifies the need for regulatory reforms contained in House Bill 247 (Romanchuk, R-Mansfield) that protect customers from above-market power charges. 1/25/2018