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News and Analysis

Manufacturing Leader Makes Case Against Customer-Paid AEP Generation Development

March 29, 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

DeWIne Appoints Deters to PUCO

March 29, 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

Judge Rejects FES Bankruptcy Motion

March 22, 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

PJM Watchdog: Ohio Nuke Plants Can’t Compete

March 22, 2019

The independent market monitor for PJM Interconnection released its 2018 State of the Market Report last week. The study catalogs unprofitable coal and nuclear power plants that operate within the PJM grid and marketplace. The report identifies three nuclear plants that are receiving market signals to retire. The list includes two Ohio nuclear power plants: Perry and Davis-Besse.

According to a summary by Utility Dive, the market monitor, Dr. Joseph Bowring, said the only plants that are not projected to meet their avoided cost each year are one-unit nuclear power plants like those in Ohio. Translation: these plants are truly uneconomic. 3/21/2019

Ohio Valley Natural Gas Production Estimates Swell

March 22, 2019

A report finds that the Ohio Valley region will supply half of U.S. natural gas by 2040. Cost advantages for the production of natural gas liquids in the Midwest are expected to outperform the Gulf Coast as soon as 2020.

The report by IHS Markit Study released this week at the World Petrochemical Conference in San Antonio, Texas, says the Ohio Valley region “will play a key role in satisfying America’s increasing reliance on natural gas, as well as keeping energy costs moderate. Favorable production economics place the Marcellus and Utica shale plays amongst the most cost competitive in the nation.”

The IHS Markit study, commissioned by Shale Crescent USA and JobsOhio, quantifies for the first time the anticipated development and production growth emerging from one of the world’s most prolific sources of natural gas and natural gas liquids. 3/21/2019

Manufacturers: ‘Goldplating’ is Increasing Electricity Costs

March 15, 2019

At their meeting this week, members of the OMA Energy Committee heard a presentation by Anthony Smith and Tim Ling. Smith is Global Energy Coordinator at Cooper Tire and Rubber Company. Ling is Corporate Environmental Director at Plaskolite, LLC. The duo are heavily involved in energy policy and serve as board members of the OMA Energy Group.

They detailed the growth of electric distribution and transmission charges at a time when generation charges have been decreasing. They also described how much subsidy is now included in customers’ bills. And, they described how utilities are aggressively charging more for transmission under the guise of grid modernization.

Their conclusions about ‘goldplating’ are validated in this recent USA Today article that describes utility overspending. 3/14/2019

Government Objects to FirstEnergy Deal

March 15, 2019

In a report on complex bankruptcy court proceedings, business reporter John Funk of the Cleveland Plain Dealer describes how FirstEnergy Solutions’ (FES) restructuring plan has hit a roadblock with federal agencies.

FES is the bankrupt affiliate of Akron-based FirstEnergy Corp. (FE). Total FES debt is about $3.6 billion according to the story. The company filed for bankruptcy protection one year ago and has fashioned a settlement with creditors. A growing army of federal and state agencies now says the settlement agreement violates the law.

“The U.S. Securities and Exchange Commission, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, the U.S. Environmental Protection Agency and the federal bankruptcy court’s U.S. Trustee all have filed lengthy and strongly worded objections to a restructuring plan the company rolled out Tuesday. They also found the FES restructuring plan short on detail and silent on how much it would cost to clean up the environment if the coal and nuclear plants are closed,” according to the story.

“Federal attorneys for the NRC and U.S. EPA, working with lawyers for Ohio and Pennsylvania, argue that FirstEnergy itself has significant independent liability to the government under environmental laws. They contend that terms of the restructuring agreement that let FE off the hook are illegal.” 3/14/2019

Ohio Shale Oil & Gas Production Up and Up

March 15, 2019

This week the Ohio Department of Natural Resources (ODNR) released its fourth quarter 2018 natural gas and oil production report.

During the fourth quarter of 2018, Ohio’s horizontal shale wells produced 5,810,484 barrels of oil and 663,534,323 Mcf (663 billion cubic feet) of natural gas.

Natural gas production from the fourth quarter of 2018 showed a 31.89 percent increase over the fourth quarter of 2017, while oil production increased 38.56 percent for the same period. Wow!

Here’s a good visual from Richard Simmers, Chief, ODNR Division of Oil and Gas Resources Management, showing the growth story of oil and gas production in Ohio’s Utica shale play. 3/14/2019

Nuke Retirement Impact Study Flawed

March 1, 2019

In April 2018, The Brattle Group published a report on the impact of announced nuclear retirements in Ohio and Pennsylvania. This report was published after FirstEnergy Solutions made an appeal to the U.S. Department of Energy for subsidies for the plants and after FirstEnergy Solutions filed for Chapter 11 bankruptcy. In this report, the authors outline reasons that they believe justify state and/or federal subsidies to continue operating uneconomic nuclear power plants in Ohio and Pennsylvania.

This report is being used by proponents of a bailout of the economically failing nuclear plants. Unfortunately, the report is analytically flawed.

The report does not in any way address what the potential cost of a state and/or federal nuclear subsidy to ratepayers would be, so that a cost/benefit analysis cannot be made.

The report fails to recognize the operation of competitive markets for electricity; the report makes the assumption that should these plants retire, the markets in which they operate will not respond accordingly. That is, it assumes that no individual power producer would see an opportunity in increased capacity costs to develop new renewable energy products.

The report ignores the value of competitive markets to provide the most efficient price of electricity for consumers.

And, the report supports a technology over a technology-neutral regulatory system that has served Ohioans for nearly a decade.

Read more. 2/28/2019

MIT Professors Stump for Nuclear Power Plant Bailout

March 1, 2019

Appearing before the members of the House Energy and Natural Resources Committee this week, a pair of Massachusetts Institute of Technology (MIT) faculty members provided a presentation on the low-carbon benefits derived from nuclear power.

While their testimony was not related to any specific legislative proposal, it was likely intended as context for anticipated legislation to bailout Ohio’s two nuclear power plants owned and operated by FirstEnergy subsidiaries.

The two-year MIT study, “The Future of Nuclear Energy in a Carbon-Constrained World,” takes looks at the U.S. landscape and the stalled nuclear energy capacity growth. It outlines new policy measures to potentially reverse that trend, but the study did not include an examination of the state of Ohio or its zero-emissions nuclear proposals from the last General Assembly.

Among the recommendations to policymakers: “decarbonization policies should create a level playing field that allows all low-carbon generation technologies to compete on their merits.” This, of course, is not what the various bailout proposals would do. 2/28/2019