News and Analysis
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
Six months after the passage of House Bill 6, the Public Utilities Commission of Ohio (PUCO) this week gave approval to FirstEnergy utilities to impose a new decoupling rider on customer bills. Under the mechanism, if annual revenue in a given calendar year is less (or greater) than 2018’s baseline revenue, FirstEnergy utilities will charge (or credit) the difference to customers through the decoupling rider.
Why was 2018 used as the baseline? Because 2018 was among the warmest summers in history. Therefore, 2018 produced some of the highest revenue for the three FirstEnergy utilities. The rider will guarantee FirstEnergy companies the same amount of revenue received in 2018.
The PUCO this week acted on several other issues that will affect manufacturers’ power bills. Make sure you are participating in the OMA Energy Group for the most comprehensive updates on PUCO activity. 1/16/2020
Wholesale electricity prices at major U.S. hubs were generally lower in 2019 than in 2018, except in Texas. The U.S. Energy Information Administration reports that average prices were 15% to 30% lower at most hubs — including the PJM marketplace that serves Ohio. Much of the price decline was due to lower natural gas prices. 1/14/2020
According to the U.S. Energy Information Administration’s latest inventory of electric generators nationwide, 42 gigawatts (GW) of new capacity additions are expected to start commercial operation in 2020. Solar and wind represent almost 32 GW (76%) of these additions. Scheduled capacity retirements (11 GW) for 2020 will primarily be driven by coal (51%). 1/15/2020
Late last year, regulators at the Federal Energy Regulatory Commission (FERC) issued a long-anticipated ruling to prevent subsidized power generation from distorting the wholesale market for electricity. In the PJM marketplace that serves Ohio customers, the ruling means the owners of Ohio’s two nuclear power plants will encounter difficulty in selling their electric capacity into the wholesale market.
See FERC’s press release on the ruling, which will likely be challenged in court.
OMA energy experts are still reviewing the complex FERC action, but our initial read suggests the minimum offer price rule (MOPR) is a giant stick against state subsidies. The ruling appears to force generators to decide whether to take a state subsidy or freely participate in the wholesale market.
Ironically, Ohio’s recently enacted House Bill 6 — which requires businesses and residential customers to subsidize nuclear generation, as well as select coal and renewable generation assets — will now deprive the nukes, OVEC, and the solar projects from competitive revenue in the wholesale market. This will make the subsidized resources either unviable or will shift more costs to ratepayers — depending on how the federal rule plays out.
Regardless, it appears that major customer impacts are in store. Plan to join the OMA Energy Committee meeting on March 12, after the dust has settled, to learn what this means for your business. 1/9/2020
The OMA’s energy counsel, Kim Bojko of Carpenter Lipps & Leland LLP, was recently appointed to the Public Utilities Commission of Ohio (PUCO) Nominating Council. The PUCO’s five commissioners regulate utility services, including electric and natural gas companies.
Meanwhile, the PUCO is searching for a new commissiner to fill a five-year term that begins April 11. Gov. DeWine will soon select the new commissioner from a list of finalists offered by the nominating council. 1/6/2020
A new study by the U.S. Chamber’s Global Energy Institute shows Ohio would lose 700,000 jobs and $245 billion in GDP over just four years if a ban on fracking were imposed in the U.S. The report is part of the Institute’s “Energy Accountability Series.”
According to the study, if such a ban were imposed in 2021, the average Ohioan would see their cost of living inflated by more than $5,600 by 2025, while Ohio’s total household income would fall $119 billion. State and local governments across Ohio would experience a loss of $20.6 billion in tax revenue.
Nationwide, a fracking ban would eliminate 19 million jobs and reduce U.S. GDP by $7.1 trillion. Natural gas prices would leap by 324%, causing household energy bills to more than quadruple. By 2025, petroleum products such as gasoline and diesel would cost roughly double what they are today. 1/2/2020