News and Analysis
Last Friday’s (Nov. 20) resignation of Public Utilities Commission of Ohio (PUCO) Chair Sam Randazzo topped off an active week as the House Bill 6 scandal continues to unfold.
Randazzo’s resignation came less than a week after FBI agents searched his home, and less than 24 hours after FirstEnergy disclosed that its former CEO and two other senior executives were fired after it was learned that a $4.3 million payment was made in January 2019 to end a consulting agreement with a company tied to a person who soon after was appointed to regulate Ohio utilities. Randazzo was not named in the disclosure.
PUCO Vice Chair M. Beth Trombold will serve as acting chair, while the PUCO Nominating Council prepares to identify a list of finalists for Randazzo’s permanent replacement. This development will be covered in depth at the upcoming OMA Energy Committee meeting on Dec. 2. 11/23/2020
Recent testimony from Judith Lagano, a senior vice president for independent power producer NRG Energy, reveals the lie behind House Bill 6 subsidies for Ohio’s two nuclear power plants owned by Energy Harbor (formerly FirstEnergy Solutions). Earlier this month, Lagano told Ohio senators the following:
“FirstEnergy told legislators during the HB 6 debate that without a subsidy, its affiliate’s nuclear generation would close because it was unprofitable. That affiliate, FirstEnergy Solutions, filed a Chapter 11 bankruptcy. At the end of that bankruptcy process, the new company, now known as Energy Harbor, has a stronger balance sheet, less debt, and is forecasting robust cash flow and profits. In fact, Energy Harbor has revealed that the company’s profits and cash flow are strong even without the HB 6 subsidies, as depicted in its May 10, 2020, 2020-2022 Financial Outlook.”
Lagano told lawmakers that Energy Harbor had since removed its financial presentations from its public website, but that the company expects to make approximately $515 million in profit this year, $585 million next year, and $645 million in 2022, “even without the approximately $150 million in annual HB 6 nuclear subsidies. … Every dollar of the (roughly) $150 million/year it collects from here on simply fills Energy Harbor’s coffers at the expense of Ohio’s customers.”
More evidence that it’s past time to repeal and reform HB 6. 11/24/2020
Ohio’s House and Senate leaders say they want to take action on House Bill 6 repeal and/or reform during the current lame duck session. Several bills are under consideration, but only one has been endorsed by the OMA.
Introduced by Rep. Mark Romanchuk (R-Ontario), a manufacturer, House Bill 772 would protect customers and markets by repealing HB 6’s subsidies, as well as the law’s “decoupling” mechanism that benefits FirstEnergy by rewarding it with unearned income from customers. Unlike the pending “straight repeal” bills, HB 772 would not reinstate energy efficiency standards (and rider) or renewable portfolio standards (and rider) that HB 6 repealed and modified. (For more, see this two-page summary.)
If you haven’t yet urged your lawmakers to support HB 772, there’s still time. While the OMA has testified and heavily lobbied in support of HB 772, nothing is more valuable than lawmakers hearing directly from manufacturers in their districts. 11/24/2020
More developments tied to the House Bill 6 scandal unfolded this week as FBI agents searched the Columbus home of Public Utilities Commission of Ohio (PUCO) Chairman Sam Randazzo. No arrests are planned at this time, according to FBI officials, who declined to specify the nature of the search. Randazzo was a no-show at this week’s PUCO meeting.
When asked about the incident, Gov. Mike DeWine said he’s waiting for more information, adding, “I hired him, I think he’s a good person. If there’s evidence to the contrary, we’ll act accordingly.”
Then on Thursday evening, Nov. 19, it was reported that FirstEnergy’s latest filing with the Securities and Exchange Commission says former senior management members were fired after an internal investigation discovered certain executives made a $4 million payment to an entity with ties to an unnamed state regulator. Cleveland.com reports on this breaking development. 11/18/2020
The OMA encourages members to contact their state lawmakers and urge timely passage of House Bill 772, legislation that would repeal and reform harmful provisions of House Bill 6 — the state’s nuclear subsidy law — in a manner that protects Ohio’s customers and competitive markets.
Email or call your representative and senator by using the OMA Manufacturing Advocacy Center. It provides a sample message that can be personalized. 11/19/2020
This week, the OMA called on Ohio lawmakers to quickly pass House Bill 772, legislation that would repeal and reform harmful provisions of House Bill 6 — the state’s nuclear subsidy law — in a manner that protects customers and markets. The OMA is part of a customer coalition that supports the enactment of HB 772. Read the OMA’s press release.
The sponsor of HB 772, Rep. Mark Romanchuk (R-Ontario), this week testified before the Senate Energy and Public Utilities Committee in support of the legislation. His testimony included this analysis by the Legislative Services Commission showing HB 772 would save Ohioans nearly $3 billion over the next decade by slashing ratepayer-funded subsidies to electricity companies. (Here is the bill’s full text.)
There remains no clear timeline for HB 6 action in either chamber, although Senate President Larry Obhof (R-Medina), Speaker Bob Cupp (R-Lima), and Gov. Mike DeWine have listed it as a lame duck priority. 11/11/2020
Among its numerous flaws, House Bill 6 created a generous, ratepayer-funded subsidy for the Ohio Valley Electric Corporation (OVEC) and its two 1950s-era coal power plants – one in Ohio and one in Indiana.
As explained in this memo, authored by OMA’s energy engineering consultants John Seryak and Peter Worley of RunnerStone LLC, the OVEC coal plants have been selling electricity for less than it costs to generate for nearly a decade. Under HB 6, Ohioans will be forced to continue to subsidize these uneconomical plants through 2030 to the tune of an estimated $700 million. Because OVEC has a power agreement and debt through 2040, OVEC owners will likely seek more subsidies in 2030.
Meanwhile, OVEC estimates its energy output this year will be 39% less than in 2010, adding to the reasons why HB 6 needs to be repealed and replaced with market-oriented, competitive energy policy. 11/10/2020
This week, the Public Utilities Commission of Ohio (PUCO) initiated an audit of FirstEnergy’s compliance with corporate separation laws and regulations. The action by the PUCO comes after the agency has been petitioned and criticized for not investigating wrongdoing by the regulated monopoly utility company, FirstEnergy, referred to as “Company A” in the federal prosecution against Larry Householder for its role in HB 6.
In the wake of guilty pleas entered by two of the accused conspirators last week, FirstEnergy fired its CEO and other executives. FirstEnergy’s board said that the executives had violated company policies and its code of conduct. With that admission, the PUCO initiated the audit of FirstEnergy.
Meanwhile eyes are on the post-election or lame duck legislative session that will soon convene for a month or so. Late last week, Senate President Larry Obhof told the Columbus Dispatch (subscription) that the Senate will hold informal hearings on House Bill 772 (Romanchuk) to repeal HB 6. 11/5/2020
The fallout continues from the House Bill 6 scandal.
On Thursday, Oct. 29, U.S. District Court Judge Timothy Black accepted guilty pleas from two of the individuals facing federal racketeering charges alongside former Ohio House Speaker Larry Householder (R-Glenville). Hours later, FirstEnergy Corp. announced it had terminated CEO Charles E. Jones Jr. and two senior vice presidents for violating company policies and its code of conduct.
As reported at Cleveland.com, Juan Cespedes, a former lobbyist for FirstEnergy, and Jeffrey Longstreth, a longtime campaign and political strategist for Householder, admitted they took part in a “massive pay-to-play scandal” tied to the nuclear subsidy law and a subsequent referendum campaign. Federal authorities allege the scheme involved more than $60 million in bribes to Householder and a handful of allies.
The Statehouse News Bureau writes that the guilty pleas mean the defendants have “reached a deal with federal prosecutors.” U.S. Attorney David DeVillers says the “investigation remains ongoing.”10/29/2020
The ability to store electricity — and do so in a way that’s affordable — is critical to expanding the use of renewable energy. So it’s worth noting the U.S. Energy Information Administration has reported that the average energy capacity cost of utility-scale battery storage in the U.S. fell from $2,152 per kilowatt hour (kWh) in 2015 to $625 per kWh in 2018 — a nearly 70% decrease. 10/28/2020