News and Analysis
The CEO of FirstEnergy recently told financial analysts that he is ready to assist Ohio lawmakers in developing a new energy policy to subsidize nuclear power plants since the Federal Energy Regulatory Commission’s (FERC) December 2019 order seems to prevent the subsidies provided by House Bill 6.
As reported by Utility Dive, FirstEnergy’s Chuck Jones said state policymakers are generally unhappy with the results of utility deregulation, including PJM’s market system. Yet numerous studies detail how deregulation has successfully driven down wholesale electric power prices in Ohio. What’s really going on? To find out, join the OMA Energy Committee meeting on March 12.
If you haven’t already done so, check out the OMA analysis of FERC’s order on subsidized power and what it means for manufacturers. The order is intended to protect the marketplace via fair rules to foster competition. 2/13/2020
In case you missed it, Crain’s Cleveland Business last weekend published a story highlighting the OMA study of FERC’s recent order. Crain’s wrote: “Federal regulators have taken issue with Ohio’s subsidies for the Davis-Besse and Perry Nuclear plants — and may shut the plants out of the power grid’s capacity auctions.”
Through its December order, FERC expanded its Minimum Offer Price Rule (MOPR), which was originally intended to prevent state subsidization of new natural gas generators. Under FERC’s new order, the MOPR would apply to nuclear, coal and renewable power plants that receive state subsidies in order to maintain a competitive market. 2/10/2020
In the weeks since FERC issued its December 2019 order related to unfair subsidies for some power generators, numerous organizations have shared their reactions and filed appeals.
Todd Snitchler, a former PUCO chair and the current president of the Electric Power Supply Association (EPSA), authored this column, predicting that subsidy supporters and their allies will employ spin and accuse the federal government of overreach — saying the FERC is denying states of their due discretion to determine their own fuel mix. The fact is, states willingly surrendered that element of a planned economy in favor of a competitive market.
Snitchler wrote: “Since restructuring, states have relied on, and benefited from, regional power markets — utilizing excess supply in other areas when their own supply may be insufficient — to ensure reliability at the lowest possible cost. Now looking to double-dip into taxpayer pockets and the market, certain generators have tried to convince politicians to layer one-off policies onto a regional/wholesale framework.” 2/13/2020
Gov. Mike DeWine has re-appointed Lawrence Friedeman as commissioner on the Public Utilities Commission of Ohio (PUCO). Friedeman is the commission’s sole Democrat. His new term will run from April 11, 2020 through April 10, 2025.
The PUCO’s five commissioners regulate utility services, including electric and natural gas companies. 2/6/2020
The U.S. Energy Information Administration predicts that the nation’s electricity generation from renewable sources — such as wind, solar, and hydro — will surpass nuclear and coal generation next year. Nationwide, natural gas is expected to remain the leading source generation for the next quarter-century. 2/3/2020
More than a month after the Federal Energy Regulatory Commission (FERC) issued its landmark order to protect competitive wholesale electricity markets from subsidized power, stakeholders are gaining clarity into the outcome.
The order, which modifies and expands the Minimum Offer Price Rule (MOPR), was originally designed to prevent state subsidization of new natural gas generators. Under FERC’s recent order, the expanded MOPR also applies to nuclear, coal, and renewable power plants that receive state subsidies. FERC did this to level the playing field.
The FERC order tips House Bill 6 on its head, according to new OMA analysis. In 2019, Ohio lawmakers rushed HB 6 through the legislative process, forcing Ohioans to subsidize two nuclear power plants, as well as select coal and renewable power facilities. OMA Energy Technical Consultant John Seryak of RunnerStone LLC warned of such market consequences last summer.
Members are invited to register for the OMA Energy Committee’s March 12 meeting for further analysis of this developing situation. 1/30/2020
In an editorial at Cleveland.com, OMA Vice President and Managing Director Ryan Augsburger spotlights the surge in Ohio’s natural gas production and how it’s benefiting manufacturers — especially as the fuel is increasingly used for electricity generation.
But Augsburger says the Buckeye State’s “electricity advantage is under siege as investor-owned utilities chip away at customer savings” — and as competitive gas-fired power generation projects are canceled due to the recent approval of House Bill 6, the nuclear bailout law. He reminds readers that the OMA Energy Group is working to “ensure access to the most economical sources of energy, while promoting efficiency that lowers costs for manufacturers and strengthens grid resiliency.” 1/27/2020
Renewable sources will produce nearly half of the world’s electricity generation by 2050, according to the U.S. Energy Information Administration. Coal-fired generation is expected to fall to 22% of the globe’s electricity mix over the next 30 years. As of 2018, roughly half of Ohio’s electricity generation was coal-fired and just 3% was classified as renewable. 1/27/2020
The Public Utilities Commission of Ohio (PUCO) Nominating Council has submitted the names of four finalists to be considered by Gov. DeWine to fill a five-year PUCO term that begins April 11, 2020. Republican Gerardo Torres of Loveland was the top vote-getter. The governor has 30 days to make the appointment or request a new list. His pick is subject to Senate approval.
The PUCO’s five commissioners regulate utility services, including electric and natural gas companies. 1/23/2020
The future is uncertain for Ohio’s two nuclear power plants — with or without the ratepayer-funded subsidies provided by House Bill 6. That’s the takeaway from comments this week by PJM Interconnection’s independent monitor, Joseph Bowring, president of Monitoring Analytics.
Hannah News Service reports that Bowring told the Ohio Consumers’ Counsel Governing Board that Ohio’s nuclear plants “could hemorrhage 10% to 20% of their revenue” due to a December action by the Federal Energy Regulatory Commission (FERC). Bowring defended FERC’s decision to protect the competitive market. In its ruling, the commission singled out Ohio as a leading proponent of energy subsidies.
If Energy Harbor Corporation (formerly FirstEnergy Solutions) experiences such a loss in revenue due to FERC’s action in response to HB 6, Bowring warned that the utility could return to the General Assembly asking for additional subsidies. OMA energy engineers largely anticipated the FERC ruling to protect wholesale electricity markets. As early as last June, OMA recognized that wholesale market rules could open the door to potential excessive profits for the nuclear power plant owners on the backs of Ohio customers. 1/15/2020