News and Analysis
The current version of House Bill 6 now returns to the House for a concurrence vote to approve the Senate amendments. The House had planned to concur Wednesday night, but instead adjourned around 8 p.m. — apparently because they lacked the votes to get the 50-vote majority needed to send it to the governor.
House Speaker Larry Householder may try again as early as July 25 to get final approval for the legislation. The OMA has issued a Key Vote Alert to all state representatives urging a “no” vote on the concurrence of HB 6.
After the House concurs, the bill will be presented to Gov. Mike DeWine, who has made statements that he favors efforts to protect the jobs at the power plants. The OMA joined forces with the Office of the Ohio Consumers’ Counsel in sending a letter to the governor, urging him to veto HB 6 to protect Ohio businesses and families.
Take some time over the next week to call your state representative (ideally on their mobile phone) to let them know you oppose HB 6 and urge them to do the same. Equally important, call or write your state senator to thank them if they voted no. 7/18/2019
During this week’s debate on HB 6, a floor amendment was added to delay the bill’s subsidy collections and payments to power plants by one year (until 2021). This raises further questions about the need for the bill. For weeks, nuke plant owners contended that customer funds were needed by July 17 to prevent the plants from decommissioning.
Others have questioned the wisdom of passing a “bailout” now, considering the state could wait for the FirstEnergy Solutions bankruptcy proceedings to be completed soon so that lawmakers would be able to see the real financial need, if any. The OMA’s profitability analysis finds that the nuke plants are in fact going to be profitable after bankruptcy.
Before advancing HB 6 to the full Senate, the Energy and Public Utilities Committee adopted several other amendments — some of which add financial protections for utilities at ratepayers’ expense, such as the new decoupling mechanism and OVEC revision. A provision was also inserted to allow mid-sized industrial customers to opt-out of paying the energy efficiency rider, but the benefit is fleeting since utility-managed energy efficiency programs will be discontinued under the bill. Also of interest was an added provision allowing mercantile customers to enter into power purchase agreements with distribution utility companies.
The OMA Energy Group will be reviewing all the Senate changes at their July meeting. 7/18/2019
Among the thousands of law changes made by the new state budget (HB 166) is a utility-friendly provision that allows FirstEnergy distribution utility companies to keep even more profit rather than return excessive earnings to customers. The House added the provision in its version of the budget, and the Senate retained the language. The OMA lobbied lawmakers in both chambers to remove the unfair provision. 7/18/2019
In energy — like all other sectors of the economy — the free marketplace works, if politicians allow it. That fact was proved again last month when Ohio’s wholesale electricity prices reached new lows before rebounding slightly.
According to analysis from OMA Connections Partner Scioto Energy, the decline started in June as forward prices dramatically dropped 10% and ended the month with a decline of 8%. The experts at Scioto Energy say this is a new era in wholesale electricity pricing for Ohio as the abundant natural gas in the shale reserves — along with expanded gas storage inventories — have “set the market for the steep decline to all-time lows, now trading an average of only $25 per MWh all the way out through 2024.” 7/15/2019
With negotiations between Ohio’s House and Senate holding up passage of the new two-year budget, the nuclear bailout bill (House Bill 6) is part of the horse-trading between the state’s big three leaders — the governor, speaker of the House, and Senate president. If HB 6 is approved in present form, ratepayers will see higher electricity costs, while Ohio’s energy markets will suffer from market distortion and decreased investment in new generation.
The OMA — a strong opponent of HB 6 — has urged senators to strengthen the bill’s audit provisions to protect ratepayers. However, that has not been among the proposed amendments so far. A recent column in National Review highlights how the nuke plants’ hedge fund owners have refused to accept an amendment that would make the facilities open their books and prove they are unprofitable in order to receive subsidies. “That pretty much says it all,” concludes author Travis Kavulla of the R Street Institute, a free-market think tank.
This week, Sen. Steve Wilson (R-Maineville), chair of the Senate Energy and Public Utilities Committee, said things are “still on track” for HB 6 to be passed out of the Senate yet this month. Hannah News Service reported that the chairman believes Senate leadership still supports the bill.
While there is still time, manufacturers should contact their state legislators — especially senators — and tell them NO on the nuke bailout! 7/11/2019
The Senate Energy and Public Utilities Committee met over the weekend to hear more testimony on House Bill 6, the nuclear bailout bill, but adjourned without an up-or-down vote on the legislation.
The committee did, however, adopt two minor amendments to the legislation. One amendment, offered by committee Chair Sen. Steve Wilson (R-Maineville), would allow the Public Utilities Commission of Ohio (PUCO) to modify its rules to ensure businesses with multiple meters are not charged for each meter. That change was requested by the commission to address concerns raised by the OMA.
It was evident to Statehouse observers that the failure to pass a new state budget — which is supposed to be passed no later than June 30, as required by the Ohio Constitution — was tied to HB 6, which is the top priority of Ohio House Speaker Larry Householder.
If HB 6 is approved in present form, ratepayers will see higher electricity costs, while Ohio’s energy markets will suffer costly distortion and decreased investment in new generation.
While there is still time, manufacturers should contact their state legislators and tell them NO on the nuke bailout! Make your senator your priority contact. 7/1/2019
Last Friday, a federal report showed that U.S. crude oil production soared to new heights in April, hitting 12.16 million barrels a day. Booming shale production has allowed U.S. oil output to overtake that of Saudi Arabia and Russia, thereby helping to stabilize energy costs for manufacturers and other businesses. Overall, Ohio is currently the 13th leading state for crude oil production, and the fifth largest producer of natural gas. 7/1/2019
The Ohio Senate Energy and Public Utilities Committee this week held additional hearings on House Bill 6, the nuclear bailout legislation. Committee Chair Steve Wilson (R-Warren County) unveiled a new version of the bill Wednesday afternoon. The Senate’s substitute version of HB 6 makes a number of improvements to the House-passed bill, including some that were suggested by the OMA.
Most notably, the Senate version installs guardrails around the bailout payments to ensure ratepayer funds are actually needed to maintain power plant operations. For example, unlike House language that authorized an audit only of the “Clean Air Credit” program itself, the Senate bill would require plant owner FirstEnergy Solutions to “promptly and fully” provide “any document, information, data, or other request” from the PUCO or its advisers. Failure to do so would result in suspension of the subsidy.
At this week’s hearing, the OMA provided opponent testimony since the bill would still distort the electricity market in Ohio, and would continue to subject manufacturers to new costs — known and unknown — without providing offsetting benefits. The Senate committee is expected to vote on its version of HB 6 today (June 28) and final passage will likely come Saturday or Sunday.
Look for another update on HB 6 in the July 2 edition of OMA’s Leadership Briefing. 6/27/2019
A panel of OMA members appeared before the Senate Energy & Public Utilities Committee on Tuesday, June 18, to share reasons why House Bill 6 is bad for manufacturers.
OMA Energy Committee Chair Brad Belden, president of Belden Brick Co. of Canton, told senators the bill would directly increase his company’s electricity costs. Belden said, “There are a lot of moving parts in HB 6 and the math is not as simple as some would have us believe. For Belden Brick, we estimate the net direct cost of the Clean Air Program, OVEC subsidies and increased capacity costs — minus the renewable portfolio standard costs — is about $40,000 per year, plus a lot of other blank checks that could dwarf the cost increase I just shared with you.”
David Johnson, CEO of Summitville Tiles in Columbiana County, reminded lawmakers of the importance of deregulating Ohio’s generation segment. The former OMA chairman noted that Ohio started the deregulation process two decades ago, and that it has produced upwards of $3 billion in savings per year for Ohio’s ratepayers.
Anthony Smith, global energy coordinator for Cooper Tire and Rubber in Findlay, highlighted how the bill also provides subsidies for the utility owners of two coal power plants, including one in Indiana. He informed senators that newly updated cost estimates show that under HB 6, ratepayers would be charged an additional $488 million. His testimony included a rebuttal of several myths espoused by bill supporters. 6/18/2019
Testifying against House Bill 6 this week were OMA members (from left) David Johnson of Summitville Tiles, Brad Belden of Belden Brick Co., and Anthony Smith of Cooper Tire and Rubber.
As unbelievable as it sounds, House Bill 6 would create windfall profits for Ohio’s two nuclear plants by as much as $338.5 million per year — or more than $2 billion over the six-year term of HB 6’s “Clean Air Program.”
Electric ratepayers across Ohio would be left holding the bill.
The OMA has produced an independent analysis of the nuclear plants’ potential profitability under HB 6. Read this document to better understand how the bill would create multiple compensation mechanisms for these plants; trigger special treatment of the plants’ capacity revenue; and make changes in wholesale electricity markets to create even more revenue.
Under the guise of “clean air,” this bill is nothing but an audacious money grab. 6/20/2019