News and Analysis
The company formerly known as FirstEnergy Solutions (FES) announced late last week it has successfully exited Chapter 11 and adopted its new name: Energy Harbor. In 2018, FES entered bankruptcy and in 2019 convinced Ohio lawmakers to enact House Bill 6, which is set to provide an estimated $150 million a year of ratepayer-funded subsidies to the company’s two nuclear power plants. 3/2/2020
In 2019, U.S. annual wind generation exceeded hydroelectric generation for the first time, according to a report this week from the U.S. Energy Information Administration. The agency notes that “wind capacity additions tend to come online during the fourth quarter of the year, most likely because of tax benefits.” 2/26/2020
The Public Utilities Commission of Ohio is giving Ohio’s investor-owned utilities until Sept. 30 to accept applications for energy-efficiency rebates. The utilities will then have until Dec. 31 to wind down their energy efficiency programs, as required by House Bill 6. The elimination of the efficiency programs was used as justification for HB 6’s above-market charges, which are set to subsidize select coal, nuclear and solar power plants.
Manufacturers planning or implementing an energy efficiency project should file their rebate application as soon as possible — certainly no later than Sept. 30. The PUCO order applies to Ohio’s four investor-owned utilities: AEP Ohio, Duke, DP&L, and FirstEnergy.
The cost of the efficiency programs may persist into 2021 and be charged to customers via a rider. Manufacturers should consider opting out of this charge-with-no-benefit, as allowed by law. Contact OMA energy engineer John Seryak with questions or for assistance. 2/27/2020
As noted last week in the OMA’s Energy Guide, natural gas prices are low — and they keep dropping. The U.S. Energy Information Administration reports that on Feb. 10, the near-month natural gas futures price closed at $1.77 per MMBtu, the lowest February closing price (in real terms) for the near-month contract since at least 2001. 2/17/2020
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