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News and Analysis

Cold Messes With Texas (and Its Electric Reliability)

February 19, 2021

This week’s massive winter storms and frigid temperatures wreaked havoc over much of the U.S. Texas has seen the most outages, with businesses and residences left in the dark and sending spot electric prices through the roof. Observers and pundits have been quick to point fingers at different electric generation technologies, regulatory constructs, energy policies, and even Texas’ go-it-alone electrical grid. Could this happen in Ohio?

The 2014 polar vortex knocked out 40,200 megawatts (MW) of power generation in Ohio and the region. Nothing was spared. Natural gas, nuclear, and renewables all had failures. Coal was impacted heavily, with 13,700 MW of outages. However, Ohio’s power stayed on because the Buckeye State is part of a 13-state power grid market called PJM Interconnection. (PJM is widely considered one of the premier grid and wholesale market structures in the world.)

Like other multi-state grids, PJM allows diverse generators from a multi-state region to bid into the capacity market, resulting in a significant reserve capacity (over 20% more power than needed). There were only sporadic outages in Ohio and other PJM states this week.

In contrast, Texas resisted joining a multi-state grid in favor of a walled-off or island approach so that only Texas generation can supply Texas markets. The Texas grid, operated by the Electric Reliability Council of Texas (ERCOT), is not subject to federal transmission regulations and does not have a capacity market that functions to assure adequate electricity supply, especially during peak events.

During Ohio’s House Bill 6 debate, some state lawmakers expressed condemnation of PJM in favor of a Texas-like model in which utilities and generators win and customers are exposed to considerable risk. But this week has served as another reminder that in times of extreme weather, PJM’s multi-state regional market has kept the power on. 2/18/2021

EIA: Renewables Expected to Be Predominant Source of Electrical Generation by 2030

February 19, 2021

The U.S. Energy Information Administration (EIA) projects that the share of renewables in the U.S. electricity generation mix will increase from 21% in 2020 to 42% in 2050. According to the EIA estimates, renewables will collectively surpass natural gas by 2030 to be the predominant source of generation. Solar is expected to surpass wind by 2040 as the largest source of renewable generation. 2/15/2021

Senate Committee Takes First Step to Repeal HB 6’s Decoupling Mechanism

February 12, 2021

This week, the Senate Energy and Public Utilities Committee voted 11-0 to approve OMA-supported Senate Bill 10, which would repeal an anti-consumer, anti-market provision of House Bill 6.

If enacted, SB 10 would rescind HB 6’s decoupling provision, which FirstEnergy’s former CEO in 2019 said would make the company “somewhat recession proof” by guaranteeing the company’s revenue at 2018’s record-setting levels ($978 million a year).

The bill would also repeal the “significantly excessive earnings” provision authorized in the last state budget (HB 166) to allow FirstEnergy to avoid consumer-protecting profitability limits and related customer refunds.

The sponsor of SB 10, Sen. Mark Romanchuk (R-Mansfield) — who is a manufacturer — told Hannah News Service that other provisions of HB 6, including its nuclear and coal price supports, are still on the table and could appear in separate repeal legislation. 2/10/2021

Senate Bill 44 Would Kill HB 6’s Nuclear Subsidies

February 12, 2021

There is other recently introduced legislation besides Senate Bill 10 (see separate story) that unwind House Bill 6. One such measure is Senate Bill 44, sponsored by Sens. Jerry Cirino (R-Kirtland) and Michael Rulli (R-Salem) to repeal HB 6’s $150 million annual nuclear generation subsidies. The bill, which received its first hearing this week, would leave intact HB 6’s $20 million in annual subsidies for select solar projects.

Gongwer News Service reported that the sponsors of SB 44 said HB 6’s subsidy payments “may be more of a liability to beneficiary Energy Harbor under ongoing and expected changes at the federal level — and that the company’s fiscal footing should be healthier given its emergence from bankruptcy a year after HB 6’s passage.” 2/10/2021

Still More Developments in the HB 6 Drama

February 12, 2021

On Feb. 5, Generation Now — a dark money group that prosecutors allege was controlled by former Ohio House Speaker Larry Householder — admitted guilt in helping orchestrate the $60 million racketeering scandal tied to the enactment of House Bill 6.

Meanwhile, there was further confirmation this week that the owner of Ohio’s two nuclear power plants — Energy Harbor, a subsidiary of FirstEnergy — is no longer interested in receiving as much as $1 billion in generation subsidies provided by the tainted energy law. The company is concerned that accepting subsidies would put it at a disadvantage when competing with non-subsidized electricity suppliers in the 13-state PJM energy market.

A federal rule blocks companies that receive state subsidies from being able to sell electricity in a market designed to provide extra energy capacity, if needed. The OMA spotlighted this issue more than a year ago. 2/9/2021

AG Yost Announces Decoupling Deal With FirstEnergy

February 5, 2021

On Feb. 1, Attorney General Dave Yost announced a “long-term settlement” with FirstEnergy, which has agreed to stop using a House Bill 6-authorized decoupling rider that would cost customers an extra $102 million this year.

In a radio interview this week, Yost said FirstEnergy would ask the Public Utilities Commission of Ohio (PUCO) to zero out the decoupling rider. Shortly after, the PUCO announced that the decoupling rates for FirstEnergy’s Ohio distribution utilities had indeed been set to zero. (This tracker shows FirstEnergy has already collected $27 million from the rider over the past year.)

This week’s legal development comes after the OMA for nearly two years led efforts to oppose HB 6 — including its decoupling mechanism, which had guaranteed FirstEnergy and its subsidiary, Energy Harbor, profits of at least $978 million in gross annual revenues.

It’s also the second recent HB 6-related setback for FirstEnergy. In late December, a Franklin County judge ordered that $170 million per year in HB 6’s customer-funded subsidies could not be collected from customer bills. The OMA helped lead legal efforts to stop the collection of the new subsidies. 2/1/2021

What’s Next in Push to Repeal HB 6?

February 5, 2021

After this week’s legal developments involving House Bill 6, many Ohioans are wondering what’s next for the state’s scandal-tainted energy law?

For now, the OMA’s focus remains on enactment of Senate Bill 10, introduced by Sen. Mark Romanchuk (R-Ontario) to repeal anti-market, anti-consumer provisions of HB 6. The need for SB 10 to become law was highlighted in a Gongwer News Service article, in which OMA Energy Group counsel Kim Bojko is quoted as saying lawmakers should pass SB 10 to repeal HB 6’s decoupling provision, despite the recent deal brokered by Attorney General Dave Yost (see separate story).

Bojko said: “FirstEnergy didn’t apply to withdraw the rider. They didn’t remove the rider. They just set it to zero. … If it’s set to zero it can be easily repopulated.” She added that she had yet to see in writing where the company had agreed to not implement the rider in the future.

Meanwhile, Sens. Michael Rulli (R-Salem) and Jerry Cirino (R-Kirtland) have introduced Senate Bill 44 to repeal the nuclear subsidies in HB 6. The OMA will offer analysis on this bill as well as SB 10 during its Feb. 25 Energy Committee meeting, which will be held via Zoom. Members are invited to register now. 2/4/2021

EIA: Gasoline, Diesel Prices to Increase Through 2022

February 5, 2021

Last year, U.S. average gasoline and diesel prices were the lowest they had been since 2016: $2.17/gallon for gasoline and $2.55/gallon for diesel. But the Energy Information Administration (EIA) expects that greater demand for transportation fuels will lead to higher prices during the next two years — including to an average $2.74/gallon for on-highway diesel in 2022. 2/1/2021

HB 6 Repeal Starts Anew in Ohio Senate

January 29, 2021

Sen. Mark Romanchuk (R-Ontario) on Jan. 27 presented testimony in support of his Senate Bill 10 to repeal provisions of House Bill 6, the tainted nuclear subsidy law passed in 2019. Specifically, SB 10 repeals the decoupling and significantly excessive earnings test (SEET) provisions that were intended to benefit FirstEnergy, while closing the door on decoupling riders for other utilities.

“SB 10 is an important step forward to protect customers,” said OMA president Ryan Augsburger. “We urge the Senate to strengthen the bill by repealing the Ohio Valley Electric Corporation (OVEC) subsidies that were also embedded in HB 6.” Prompt passage of SB 10 is expected. 1/28/2021

U.S. Attorney Leading HB 6 Investigation to Be Replaced

January 29, 2021

Political appointees who serve at the pleasure of the president customarily move on when there’s a new occupant of the White House. This will be the case for David DeVillers, U.S. Attorney for the Southern District of Ohio, who has conducted the investigation into Ohio’s largest bribery and racketeering scheme, while exposing its ties to House Bill 6. DeVillers charged former Speaker Larry Householder and others with serious crimes for their roles in the scandal.

The news of DeVillers being replaced was confirmed by Ohio’s U.S. Senator Sherrod Brown (D). The Columbus Dispatch (subscription) reports that the prosecution of Householder and others will proceed after DeVillers has been replaced. 1/28/2021