News and Analysis
A new report by Cleveland State University’s Energy Policy Center reveals that investment in the shale energy sector in eastern Ohio has reached $74 billion since tracking began in 2011. Findings of the study were reported by JobsOhio.
Indirect investments, such as development of new manufacturing in the area as a result of lower energy costs, were not included in the study.
Other recent studies have estimated that the Utica and Marcellus shale regions in Ohio, West Virginia and Pennsylvania will soon supply as much as 45% of U.S. natural gas production. 04/23/2019
Advocates of saving Ohio’s two nuclear power plants appeared this week before a Statehouse panel to support House Bill 6. If passed and signed into law, the bill would impose new customer charges that would be used to subsidize uneconomic nuclear power plants. Introduced last Friday by Reps. Jamie Callender (R, Lake County) and Shane Wilkin (R, Highland County), HB 6 is being fast-tracked and has already received two hearings this week.
Testifying as a proponent, power plant owner FirstEnergy Solutions was joined by local government officials from affected communities that want to save jobs at the nuclear plants and preserve sources of local tax revenue. The bankrupt FirstEnergy subsidiary justified the proposed subsidies by stating that the bill would bring environmental benefits.
The House Energy and Natural Resources Subcommittee on Energy Generation will meet again next week — on both Tuesday, April 23, and Wednesday, April 24 — when opponents are expected to present their testimony. 4/18/2019
On Monday, the U.S. Supreme Court declined to take up a pair of cases challenging state nuclear subsidies in cases brought by advocates for natural gas-fired power plants.
The Electric Power Supply Association (EPSA) contested state subsidies for nuclear plants in New York and Illinois. The case has ramifications for Ohio, which is considering a new form of nuclear power subsidies (see separate article on House Bill 6). The Electricity Consumers Resource Council (ELCON) issued a statement highlighting the threat posed by state-approved nuclear bailouts to industrial customers.
Still pending before the Federal Energy Regulatory Commission (FERC) is a proposal from regional grid operator PJM Interconnection to address nuclear subsidies in market pricing. Alternative proposals are pending at PJM and could have significant cost impacts for customers on the wholesale market. The issue will be discussed at the May 30, 2019, OMA Energy Committee meeting. 4/15/2019
Legislation may be introduced today in the Ohio House that could have far-reaching effects on electricity generation markets. This recent media report found that a draft version of the bill would, among other provisions, create a new statewide customer charge that would be used to bailout the two nuclear power plants owned by FirstEnergy Solutions.
Hearings on the bill are expected to begin next week in the House Energy & Natural Resources Committee. Rumors about the bill have been swirling for weeks and the bill is considered to be a top priority of the Speaker.
The OMA’s energy policy team is monitoring developments and will provide members with bill analyses and status.
Members of the OMA Energy and Government Affairs Committees will be invited to a special conference call next week to learn more about the bill. Watch your email or send an email to the OMA if you are interested. 4/11/2019
The regional transmission operator PJM told a House committee this week that the competitive electricity markets are lowering costs, stimulating investment, and providing system reliability in Ohio.
Stu Bresler, Senior Vice President of Operations and Markets for PJM, testified: “Ohioans, over the last five years, have seen more than $1 billion dollars in savings through our competitive markets.
“Since 2017, over ~3,200MWs of new generating capacity has come online in Ohio. An additional 7,800 MWs of new generating capacity is currently in some stage of development,” he stated.
“Although 3,000 MW of older generating units have been deactivated or retired since 2016, that generation has been replaced with more reliable and lower cost generating units. This is another indication that PJM’s competitive markets are working effectively,” said Bresler. 4/10/2019
Oil and gas development in the Appalachian Basin has brought billions of dollars’ worth of pipeline construction to parts of Ohio, Pennsylvania and West Virginia. According to an analysis by marketing agency Energy In Depth, pipeline construction projects have fed $32.6 billion of investments and generated more than 124,000 jobs.
This comes as companies have built more than 3,500 miles of pipelines in the region. According to the report, of the 25 pipeline projects approved by the Federal Energy Regulatory Commission, seven run through Ohio.
The Buckeye State has 2,167 wells producing in the Utica Shale formation, while another 875 wells have received permits and are being drilled. For more on the data released by Energy In Depth, click here. 4/10/2019
News reports this week detail recent action by federal authorities alleging that FirstEnergy and FirstEnergy Solutions have used the U.S. bankruptcy process to “scheme to” absolve former parent corporation FirstEnergy of future environmental responsibilities for power plants.
The government officials allege the companies have engaged in “abuse of the bankruptcy system.” The bankruptcy proceedings began just over one year ago.
The Office of the Ohio Consumers’ Counsel (OCC) argued that in the bankruptcy plan before the court “FirstEnergy would be shielded from any claims or causes of action related in any way to the Debtors’ businesses and property, including from any liability for the costly decommissioning of its power plants.” And, “Were funds for decommissioning to be inadequate, …, consumers or taxpayers might be (unfairly) called upon to fund FirstEnergy and FES’s power plant decommissioning liabilities to federal and state governments.”
Late yesterday Judge Koschik of the bankruptcy court issued a ruling finding that FES’s proposed release of FirstEnergy from its decommissioning and environmental obligations to the government made the underlying plan unconfirmable. “Basically the judge sent FES back to the drawing board on how to exit bankruptcy, which will trigger renegotiation of the complex settlement agreement,” said OMA’s energy counsel Kim Bojko of Carpenter Lipps & Leland. 4/4/2019
In an opinion published by the Canton Repository, Brad Belden, President, The Belden Brick Co., made the case that the PUCO should reject AEP Ohio’s filing to develop new renewable generation on its ratepayers’ dime.
Belden wrote: “The Ohio Power Co. (AEP Ohio) currently has an application pending before the Public Utilities Commission of Ohio (PUCO) that would require all AEP Ohio customers to subsidize the development of at least 900 megawatts (MW) of renewable energy. …
“… because these subsidies would be non-bypassable, all customers in AEP Ohio’s service territory, even those who already purchase power (including green power) competitively from another supplier, would have to pay the AEP Ohio renewable energy rider on the distribution portion of their electric bills. …
“The fact is, Ohio’s generation market is robust. Ohio and the surrounding region have plenty of electric generation resources to meet the electric needs of customers. …” 3/25/2019
Gov. Mike DeWIne appointed Dennis P. Deters, JD, of Hamilton Co. to the Public Utilities Commission of Ohio (PUCO) for a term beginning March 25, 2019, and ending April 10, 2021.
Deters, a Republican, is a former judge on the Ohio District Court of Appeals. He is also a former township trustee in Greater Cincinnati and a Hamilton County commissioner.
Deters was one of four finalists for the seat selected by the PUCO Nominating Council this month. Others included former lawmakers Gene Krebs and William Shuck, and former PUCO staffer Bryce McKenney.
The political makeup of the PUCO will be two Republicans, one Democrat and two independents.
The PUCO’s role is to regulate the state’s investor-owned utilities. 3/26/2019
A U.S. bankruptcy judge this week denied FirstEnergy Solutions’ (FES) request to issue expedited approval of a settlement agreement. According to this article by John Funk of the Cleveland Plain Dealer, the sticking point centers on a provision that absolves former parent company FirstEnergy Corp. of expensive remediation and decommissioning costs of both nuclear and coal power plants.
Numerous federal and state agencies cautioned the judge of the impropriety of letting FirstEnergy off the hook for known liabilities. Customers have been paying for clean-up costs for several decades but the ownership wants to escape its liability under the proposed agreement. If approved, such a move would likely transfer the clean-up costs to Ohio utility customers or Ohio taxpayers.
Also in the hearing, counsel for FES told the court that the nuclear plants may not be closed as scheduled: “… with help from our state legislators … maybe there is even hope for these units past the announced deactivation [dates],” said Brad Kahn on behalf of FES.
Hold on to your wallets and purses as FES now tries again to lever state lawmakers to give them a bailout to benefit their owners and FirstEnergy. 3/21/2019