News and Analysis
The EIA forecasts that renewables — which include wind, solar, and hydroelectric — will produce 18% of all U.S. electricity this year, and almost 20% in 2020. The EIA also predicts that wind generation will surpass hydroelectric generation to become the leading source of renewable generation in both years. Overall, natural gas is expected to continue its dominance as a fuel source for electricity production, accounting for 37% of all U.S. electricity generation this year and 38% in 2020.
In Ohio — the nation’s eighth largest net electricity producer — coal remains the largest fuel source at 47%, followed by natural gas at 35%, according to the EIA. Industrial sites account for roughly one-third of all Ohio’s electricity consumption. 5/1/2019
On Wednesday at the Ohio Statehouse, Whirlpool Corp.’s Senior Manager of Government Relations Luke Harms testified on behalf of the OMA at a hearing on House Bill 6 — legislation that would impose new charges on electric customers in order to subsidize uneconomic generation facilities. (Harms’ testimony begins at 36:19 of this video.)
The OMA opposes HB 6 and was one of 100 organizations or individuals testifying this week against the proposal. If passed and signed into law, the aggregate cost of HB 6 to Ohio customers is estimated to exceed $300 million per year, indefinitely.
In his testimony before the House Energy Generation Subcommittee, Harms told lawmakers HB 6 would create “multiple new costs and new forms of costs for manufacturers.” He also noted that the bill seemingly would penalize companies like his that are using renewable, on-site electrical generation.
Also appearing at Wednesday’s hearing on behalf of the OMA were OMA Energy Counsel Kim Bojko, partner at Carpenter Lipps & Leland LLP, and Anthony Smith, Global Energy Coordinator at Cooper Tire & Rubber Company.
Later in the day, Ohio State University economist Dr. Edward “Ned” Hill expressed strong opposition to the bill, calling it “crony capitalism.” In his testimony (beginning at 2:22:45 of this video), Hill told lawmakers that HB 6’s “subsidies without end” would be “fundamentally detrimental to the state’s economic development,” potentially deterring future private investment in Ohio’s generation market. 4/25/2019
This week, 100 individuals and organizations offered testimony in clear opposition to House Bill 6, the recently introduced nuclear power bailout legislation. OMA members are invited to learn more about the new costs that would be imposed by the legislation at a 3 p.m. briefing on Tuesday, April 30. Members can register to join via conference call — or attend in-person — by e-mailing the OMA or calling (800) 662-4463.
During the HB 6 briefing, we will review this manufacturing impact analysis by OMA energy engineering firm RunnerStone, as well as this legal analysis by OMA Energy Counsel Kim Bojko of Carpenter Lipps & Leland. Members will also get an update on the status of the bill.
In spite of the widespread concern expressed this week, House Republicans seem intent on advancing this bad legislation, possibly as soon as next week. Concerned manufacturers should express opposition to their state representatives now. 4/25/2019
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