News and Analysis
The OMA this week provided insight and analysis to Ohio lawmakers charged with reviewing the state’s nuclear bailout law (House Bill 6). In a Sept. 23 hearing by the House Select Committee on Energy Policy and Oversight, OMA board member and past chair David Johnson, CEO of Summitville Tiles Inc. in Columbiana County, told lawmakers that the OMA supports repeal and reform of the law. Johnson was one of multiple OMA members who testified against HB 6 last year.
“We believe the preferred legislative package would repeal the anti-market provisions of HB 6 that are punitive to customers,” Johnson said in his testimony. “We suggest a repeal that protects customers and maximizes customers’ cost savings.”
Also testifying were OMA’s energy counsel, Kim Bojko of Carpenter Lipps & Leland LLP, and OMA’s engineering consultant, John Seryak of RunnerStone LLC. Bojko and Seryak explained anti-competitive aspects of HB 6, including the law’s unique decoupling mechanism, as well as the “significantly excessive profits” provision contained in the state’s 2019 budget.
The complaint, filed in Franklin County Common Pleas Court, names 14 defendants, including Householder and his four associates who have been indicted and pleaded not guilty to racketeering charges.
The AG’s office is also seeking to block any party from receiving HB 6 subsidies. Cleveland.com reports that “the lawsuit doesn’t seek to stop the collection of any nuclear bailout money — just to block its payment to Energy Harbor (formerly FirstEnergy Solutions). The suit doesn’t state what would or should happen to any surcharge money collected from Ohioans.”
Meanwhile, FirstEnergy says the attorney general’s complaint is “without legal merit.” 9/24/2020
The Office of Ohio Consumer Counsel (OCC) — the state’s official consumer advocate — this week made a second request that utility regulators authorize an independent investigation into whether FirstEnergy improperly used ratepayer funds to fuel what federal prosecutors are calling the biggest bribery scandal in state history.
As reported by Ohio Capital Journal, OCC objected to a directive last week by the PUCO that FirstEnergy itself show that it didn’t use ratepayer funds to pay for a scheme to pass House Bill 6 last year.
The OCC is also asking the PUCO to reopen an investigation into the $465 million FirstEnergy was allowed to collect from Ohio ratepayers in 2017 and 2018 in the form of a “distribution modernization rider.” The Supreme Court of Ohio declared the charge to be unlawful, but the money was not refunded. 9/23/2020
During this week’s House hearing on legislation to repeal House Bill 6, discussion and questions centered around the nuclear bailout law’s poorly understood “decoupling mechanism.” The provision, which has been implemented, will assure FirstEnergy utilities will be made whole to 2018 revenue levels.
During an investor call earlier this year, FirstEnergy’s CEO bragged that the provision would make the company “somewhat recession proof.” Previous OMA analysis showed how FirstEnergy utilities stand to benefit from hundreds of millions of dollars in unearned income.
In response to questions from our members and policymakers, OMA technical consultants at RunnerStone LLC have developed this primer on decoupling and how HB 6 decoupling benefits FirstEnergy by deviating from best practices. The research finds that while there is a legitimate purpose and public policy for decoupling, the HB 6-enabled decoupling mechanism is a horse of a different color — one that provides no offsetting customer benefits. Read the memo to compare a typical decoupling mechanism to the special decoupling mechanism in HB 6. 9/17/2020
Last week, the Ohio Consumers’ Counsel (OCC) requested that the PUCO launch an investigation into FirstEnergy’s political spending to determine if the company used money collected from consumers in its activities associated with the nuclear bailout, House Bill 6.
This week, the PUCO opened a review of FirstEnergy’s political and charitable spending related to HB 6 and the subsequent referendum effort. While this action is more limited than the OCC request, the PUCO directed FirstEnergy to show cause by Sept. 30 that the cost of these activities were not included, directly or indirectly, in any rates or charges paid by customers. The PUCO did not issue a ruling on OCC’s other motions, including the request to re-open the Distribution Modernization Rider audit case.
Interested parties will have an opportunity to file comments on FirstEnergy’s response by Oct. 29 and reply to comments by Nov. 13. 9/17/2020
Research from the U.S. Energy Information Administration (EIA) shows that despite falling costs to produce renewable energy, fossil fuels — including petroleum, natural gas, and coal — continue to account for the largest share of energy production and consumption in the U.S. Last year, 80% of domestic energy production was from fossil fuels, and 80% of domestic energy consumption originated from fossil fuels. 9/16/2020
The Ohio House Select Committee on Energy Policy and Oversight has begun consideration of legislation that would repeal the nuclear subsidy law (House Bill 6). The committee this week held initial hearings on two repeal bills (HB 738 and HB 746), as well as HB 740, which would reverse budget language that benefited FirstEnergy by modifying the significantly excessive earnings test.
Rep. Jim Hoops (R-Napoleon), who chairs the select committee, told Gongwer News Service (subscription) “there remains no firm timeline for a potential repeal or for wrapping up the committee’s work.” But Chairman Hoops added that he “has no intention on repeating the hundreds of hours of testimony” heard during the 2019 debate on HB 6. 9/10/2020
This week, the Office of the Ohio Consumers’ Counsel (OCC) — the statewide advocate for residential utility customers — filed a motion to compel the Public Utilities Commission of Ohio (PUCO) to conduct a management audit of Akron-based FirstEnergy.
The OCC wants to find out if FirstEnergy or its affiliated companies used money collected from consumers to help pass and defend House Bill 6, the nuclear bailout law. As reported in this Cincinnati Enquirer article, the consumers’ counsel wants the PUCO to appoint an independent auditor “to probe whether millions collected from a fee on FirstEnergy customers’ bills, called a distribution modernization rider, was used improperly.”
The PUCO, which has been mum about the activities of the regulated utility, has until Sept. 23 to make a decision on the OCC’s motion. 9/10/2020
This week, the OMA Energy Committee held its quarterly meeting. Members were briefed on the options being considered by state lawmakers to address Ohio’s nuclear bailout law (House Bill 6) following the arrest of former Speaker Larry Householder (R-Glenford) earlier this summer. Other highlights of the meeting included:
- A review of HB 6 provisions and consumer costs, presented by OMA Energy Engineer John Seryak, RunnerStone, LLC;
- A summary of recent natural gas market trends, presented by Darin King, NiSource/Columbia Gas of Ohio; and
- An overview of electricity market trends, presented by Susanne Buckley, Scioto Energy.
OMA Energy Committee Chair Brad Belden, president of Belden Brick, reminded members that the committee’s next meeting will be Dec. 2. 9/10/2020
This week, an analysis by Reuters reported that the U.S. power industry “would struggle to meet presidential hopeful Joe Biden’s proposed mandate that it become carbon neutral by 2035 without some big breakthroughs in clean energy technology.”
According to the news agency, the country’s largest electricity suppliers said “rapid advances in nascent technologies — such as batteries to store power for lean times, carbon capture to trap waste from fossil fuels, and advanced nuclear power — will be critical to reaching net-zero carbon dioxide emissions.” 9/8/2020