News and Analysis
Analysis: Abundant Natural Gas Supplies Spur Lower Electricity Costs for Ohio
July 19, 2019In energy — like all other sectors of the economy — the free marketplace works, if politicians allow it. That fact was proved again last month when Ohio’s wholesale electricity prices reached new lows before rebounding slightly.
According to analysis from OMA Connections Partner Scioto Energy, the decline started in June as forward prices dramatically dropped 10% and ended the month with a decline of 8%. The experts at Scioto Energy say this is a new era in wholesale electricity pricing for Ohio as the abundant natural gas in the shale reserves — along with expanded gas storage inventories — have “set the market for the steep decline to all-time lows, now trading an average of only $25 per MWh all the way out through 2024.” 7/15/2019
Key Lawmaker: Senate ‘on Track’ to Pass Nuclear Bailout Bill
July 12, 2019With negotiations between Ohio’s House and Senate holding up passage of the new two-year budget, the nuclear bailout bill (House Bill 6) is part of the horse-trading between the state’s big three leaders — the governor, speaker of the House, and Senate president. If HB 6 is approved in present form, ratepayers will see higher electricity costs, while Ohio’s energy markets will suffer from market distortion and decreased investment in new generation.
The OMA — a strong opponent of HB 6 — has urged senators to strengthen the bill’s audit provisions to protect ratepayers. However, that has not been among the proposed amendments so far. A recent column in National Review highlights how the nuke plants’ hedge fund owners have refused to accept an amendment that would make the facilities open their books and prove they are unprofitable in order to receive subsidies. “That pretty much says it all,” concludes author Travis Kavulla of the R Street Institute, a free-market think tank.
This week, Sen. Steve Wilson (R-Maineville), chair of the Senate Energy and Public Utilities Committee, said things are “still on track” for HB 6 to be passed out of the Senate yet this month. Hannah News Service reported that the chairman believes Senate leadership still supports the bill.
While there is still time, manufacturers should contact their state legislators — especially senators — and tell them NO on the nuke bailout! 7/11/2019
Nuclear Subsidy Bill Continues to Linger in Senate
July 2, 2019The Senate Energy and Public Utilities Committee met over the weekend to hear more testimony on House Bill 6, the nuclear bailout bill, but adjourned without an up-or-down vote on the legislation.
The committee did, however, adopt two minor amendments to the legislation. One amendment, offered by committee Chair Sen. Steve Wilson (R-Maineville), would allow the Public Utilities Commission of Ohio (PUCO) to modify its rules to ensure businesses with multiple meters are not charged for each meter. That change was requested by the commission to address concerns raised by the OMA.
It was evident to Statehouse observers that the failure to pass a new state budget — which is supposed to be passed no later than June 30, as required by the Ohio Constitution — was tied to HB 6, which is the top priority of Ohio House Speaker Larry Householder.
If HB 6 is approved in present form, ratepayers will see higher electricity costs, while Ohio’s energy markets will suffer costly distortion and decreased investment in new generation.
While there is still time, manufacturers should contact their state legislators and tell them NO on the nuke bailout! Make your senator your priority contact. 7/1/2019
U.S. Oil Output Tops 12M Barrels a Day for First Time
July 2, 2019Last Friday, a federal report showed that U.S. crude oil production soared to new heights in April, hitting 12.16 million barrels a day. Booming shale production has allowed U.S. oil output to overtake that of Saudi Arabia and Russia, thereby helping to stabilize energy costs for manufacturers and other businesses. Overall, Ohio is currently the 13th leading state for crude oil production, and the fifth largest producer of natural gas. 7/1/2019
Senate Improves Energy Bill; Vote Imminent
June 28, 2019The Ohio Senate Energy and Public Utilities Committee this week held additional hearings on House Bill 6, the nuclear bailout legislation. Committee Chair Steve Wilson (R-Warren County) unveiled a new version of the bill Wednesday afternoon. The Senate’s substitute version of HB 6 makes a number of improvements to the House-passed bill, including some that were suggested by the OMA.
Most notably, the Senate version installs guardrails around the bailout payments to ensure ratepayer funds are actually needed to maintain power plant operations. For example, unlike House language that authorized an audit only of the “Clean Air Credit” program itself, the Senate bill would require plant owner FirstEnergy Solutions to “promptly and fully” provide “any document, information, data, or other request” from the PUCO or its advisers. Failure to do so would result in suspension of the subsidy.
At this week’s hearing, the OMA provided opponent testimony since the bill would still distort the electricity market in Ohio, and would continue to subject manufacturers to new costs — known and unknown — without providing offsetting benefits. The Senate committee is expected to vote on its version of HB 6 today (June 28) and final passage will likely come Saturday or Sunday.
Look for another update on HB 6 in the July 2 edition of OMA’s Leadership Briefing. 6/27/2019
OMA Leaders Testify Before Senate Panel to Oppose Nuclear Bailout Legislation
June 21, 2019
A panel of OMA members appeared before the Senate Energy & Public Utilities Committee on Tuesday, June 18, to share reasons why House Bill 6 is bad for manufacturers.
OMA Energy Committee Chair Brad Belden, president of Belden Brick Co. of Canton, told senators the bill would directly increase his company’s electricity costs. Belden said, “There are a lot of moving parts in HB 6 and the math is not as simple as some would have us believe. For Belden Brick, we estimate the net direct cost of the Clean Air Program, OVEC subsidies and increased capacity costs — minus the renewable portfolio standard costs — is about $40,000 per year, plus a lot of other blank checks that could dwarf the cost increase I just shared with you.”
David Johnson, CEO of Summitville Tiles in Columbiana County, reminded lawmakers of the importance of deregulating Ohio’s generation segment. The former OMA chairman noted that Ohio started the deregulation process two decades ago, and that it has produced upwards of $3 billion in savings per year for Ohio’s ratepayers.
Anthony Smith, global energy coordinator for Cooper Tire and Rubber in Findlay, highlighted how the bill also provides subsidies for the utility owners of two coal power plants, including one in Indiana. He informed senators that newly updated cost estimates show that under HB 6, ratepayers would be charged an additional $488 million. His testimony included a rebuttal of several myths espoused by bill supporters. 6/18/2019
Testifying against House Bill 6 this week were OMA members (from left) David Johnson of Summitville Tiles, Brad Belden of Belden Brick Co., and Anthony Smith of Cooper Tire and Rubber.
Analysis: HB 6 Could Boost Plants’ Profits by Over $330M Annually
June 21, 2019As unbelievable as it sounds, House Bill 6 would create windfall profits for Ohio’s two nuclear plants by as much as $338.5 million per year — or more than $2 billion over the six-year term of HB 6’s “Clean Air Program.”
Electric ratepayers across Ohio would be left holding the bill.
The OMA has produced an independent analysis of the nuclear plants’ potential profitability under HB 6. Read this document to better understand how the bill would create multiple compensation mechanisms for these plants; trigger special treatment of the plants’ capacity revenue; and make changes in wholesale electricity markets to create even more revenue.
Under the guise of “clean air,” this bill is nothing but an audacious money grab. 6/20/2019
Take Action Now to Prevent Nuke Bailout
June 21, 2019We reported last week how a dark money group known as Generation Now has continued its advertising blitz in support of the nuclear bailout bill, all in hopes of convincing state senators to pass the legislation before the summer break. It is expected the Senate could vote soon on HB 6. The OMA remains a strong opponent of the bill, but senators need to hear directly from manufacturers. Call your state senator and tell him/her that your business and household cannot afford to provide more subsidies to electric utilities. (Here is more information on the bill for you to communicate with your senator.) 6/20/2019
Poll: Nuclear Bailout Has Strong, Bipartisan Opposition
June 21, 2019A new public poll released this week shows that 7 in 10 Ohio voters are opposed to House Bill 6, the nuclear bailout bill. The opposition is strongly bipartisan with 73% of Republicans, 67% of Democrats, and 73% of independents against the plan. The poll also found:
* 88% of respondents believe that FirstEnergy Solutions should be subject to review of their financial records by the legislature before another vote on the bill.
* 82% of respondents believe the bill would hurt senior citizens and families living on fixed incomes.
* 82% of respondents oppose allowing money from the fund going to help bail out a plant in Indiana.
* 62% of respondents believe new utility costs could hurt manufacturers across the state, also impacting jobs.
Paid for by API Ohio and overseen by The Harris Poll, the survey was conducted from June 7-12 by telephone. It has a sampling error of +/- 3.4%. 6/18/2019
Supreme Court Ruling Brings Big Victory for FirstEnergy Ratepayers & OMA Energy Group
June 21, 2019The Supreme Court of Ohio ruled Wednesday that customers of FirstEnergy Ohio utilities have been overcharged by hundreds of millions of dollars since 2017. In a 4-3 decision, the Court said the Public Utilities Commission of Ohio (PUCO) improperly authorized the utilities to impose surcharges for grid modernization subsidies, and ordered the charges to be removed immediately.
Click here for a summary of the decision.
An estimated $450 million has already been unlawfully collected from FirstEnergy customers, according to OMA’s energy experts ($204 million in 2017; $168 million in 2018; and $84 million for the first half of 2019). Under current state law, none of this nearly half-billion dollars is refundable to customers.
Fortunately, the foregone costs or savings brought by this week’s legal victory is approximately $84 million — and the Court’s ruling prevents FirstEnergy from possibly collecting another $336 million during 2020-21, had PUCO approved a pending request to extend the surcharge.
The OMA Energy Group led the legal challenge to remove the distribution modernization rider (DMR).
This week’s Court decision comes as FirstEnergy continues to urge lawmakers to include a provision in the state budget (House Bill 166) that would allow its operating companies to keep “significantly excessive profits” rather than issuing refunds to more than a million customers, including manufacturers.
Congrats to the OMA Energy Group legal team on this week’s important legal win. 6/19/2019