News and Analysis
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
We reported last week how a dark money group known as Generation Now has continued its advertising blitz in support of the nuclear bailout bill, all in hopes of convincing state senators to pass the legislation before the summer break. It is expected the Senate could vote soon on HB 6. The OMA remains a strong opponent of the bill, but senators need to hear directly from manufacturers. Call your state senator and tell him/her that your business and household cannot afford to provide more subsidies to electric utilities. (Here is more information on the bill for you to communicate with your senator.) 6/20/2019
A new public poll released this week shows that 7 in 10 Ohio voters are opposed to House Bill 6, the nuclear bailout bill. The opposition is strongly bipartisan with 73% of Republicans, 67% of Democrats, and 73% of independents against the plan. The poll also found:
* 88% of respondents believe that FirstEnergy Solutions should be subject to review of their financial records by the legislature before another vote on the bill.
* 82% of respondents believe the bill would hurt senior citizens and families living on fixed incomes.
* 82% of respondents oppose allowing money from the fund going to help bail out a plant in Indiana.
* 62% of respondents believe new utility costs could hurt manufacturers across the state, also impacting jobs.
Paid for by API Ohio and overseen by The Harris Poll, the survey was conducted from June 7-12 by telephone. It has a sampling error of +/- 3.4%. 6/18/2019
The Supreme Court of Ohio ruled Wednesday that customers of FirstEnergy Ohio utilities have been overcharged by hundreds of millions of dollars since 2017. In a 4-3 decision, the Court said the Public Utilities Commission of Ohio (PUCO) improperly authorized the utilities to impose surcharges for grid modernization subsidies, and ordered the charges to be removed immediately.
Click here for a summary of the decision.
An estimated $450 million has already been unlawfully collected from FirstEnergy customers, according to OMA’s energy experts ($204 million in 2017; $168 million in 2018; and $84 million for the first half of 2019). Under current state law, none of this nearly half-billion dollars is refundable to customers.
Fortunately, the foregone costs or savings brought by this week’s legal victory is approximately $84 million — and the Court’s ruling prevents FirstEnergy from possibly collecting another $336 million during 2020-21, had PUCO approved a pending request to extend the surcharge.
The OMA Energy Group led the legal challenge to remove the distribution modernization rider (DMR).
This week’s Court decision comes as FirstEnergy continues to urge lawmakers to include a provision in the state budget (House Bill 166) that would allow its operating companies to keep “significantly excessive profits” rather than issuing refunds to more than a million customers, including manufacturers.
Congrats to the OMA Energy Group legal team on this week’s important legal win. 6/19/2019
OMA Energy Counsel Kim Bojko led the efforts on behalf of the OMA Energy Group to remove the unlawful surcharges imposed on FirstEnergy ratepayers.
State senators this week heard testimony from the sponsors of House Bill 6, the nuclear power plant bailout legislation. Reps. Jamie Callender (R-Concord) and Shane Wilkin (R-Hillsboro) told members of the Senate Energy and Natural Resources Committee that HB 6 would result in cleaner air and reduced power costs. Both senators were peppered with questions from concerned lawmakers who correctly exposed that the bill would do nothing to address air pollutants and would actually increase customer costs.
Senators on the panel were equally skeptical of proponent witnesses who came forward in support of handouts for nuclear power and certain coal-fired plants. An OMA analysis shows that the owners (hedge funds) of the nuclear power plants stand to earn a minimum profit of $176 million per year as a result of the subsidy. Interestingly, the beneficiaries did not come forward to offer testimony, instead relying on allies and suppliers to make their plea.
Also this week, Generation Now — a dark money group — has continued its advertising blitz in support of the bailout bill in hopes of swaying senators. It is expected that the Senate could vote on HB 6 in the coming days. The OMA remains a strong opponent of the bill, but senators need to hear directly from manufacturers who will be exposed to new costs. Call your state senator and tell him/her that your business and household cannot afford HB 6. (Here is more information on the bill.) 6/13/2019
The House-passed plan to create ratepayer-funded subsidies for Ohio’s nuclear power plants (House Bill 6) will discourage independent power plant developers from building new electricity generation in the Buckeye State, despite the ongoing shale boom. That’s according to new analysis by energy expert Susanne Buckley, managing partner at Scioto Energy, an OMA Connections Partner.
Buckley says that HB 6 tells potential developers who are considering Ohio: “Beware! The playing field is not level. Participate at your own risk as we favor your competition.”
She adds, “(T)he bottom line is that customers would be forced to subsidize two nuclear plants that are not profitable on their ow by paying them $176 million per year.” At the same time, the bill would “gut” the existing renewable energy and energy efficiency programs. 6/10/2019
Asim Haque, an executive at PJM Interconnection, this week presented informational testimony before the Ohio Senate Energy and Public Utilities Committee. PJM’s data provides a more accurate understanding of the new costs facing electric ratepayers under House Bill 6, as passed by the House last week. Moreover, PJM’s modeled scenarios demonstrate how HB 6 will stunt new investment in natural gas generation and increase energy market costs.
Even though the PJM modeling examined only the wholesale market — and not the increased costs spurred by changes to the capacity auction — it still shows that ratepayers would experience a net increase in electricity costs due to the subsidies proposed by the nuclear bailout legislation.
A spokesperson for Ohio’s residential consumer advocate, the Office of the Ohio Consumers’ Counsel, interpreted PJM’s data by saying, “Consumers in the region would save more than $1.5 billion in 2023 alone if the nuclear plants in Ohio and Pennsylvania are shut down and expected new, efficient power plants are built. PJM’s findings for consumer savings from power plant competition confirm that a competitive generation market is better for millions of Ohio consumers (as opposed to) charging them for bailouts and subsidies under HB 6.” 6/6/2019
On Wednesday, the Ohio House of Representatives voted 53-43 to approve House Bill 6, legislation that would create substantial, ratepayer-financed subsidies to Ohio’s nuclear power plants. The measure now goes to the Ohio Senate, which is expected to commence hearings next week, underscoring the bill’s high priority status.
The OMA continues to oppose HB 6.
Preceding this week’s vote by the full House, additional amendments were made by the House Rules Committee, an unusual step. The OMA issued a key vote alert to lawmakers, urging opposition to the bill. In the end, Speaker Larry Householder (R-Glenford) won passage. Seventeen Republicans voted against the bill, while 10 Democrats voted for the bailout package.
According to a profitability analysis conducted by the OMA, it is estimated that HB 6 will result in an annual profit of $176 million to the hedge fund owners of the nuclear facilities — and more than $1 billion over the life of the bill. The analysis raises the question as to why the State of Ohio would want to overpay by such a large sum to keep the plants open. The OMA’s estimates were based on PJM market monitor data and are conservative — especially if the plants are profitable, as another study suggests (see separate story). 5/30/2019
The OMA Energy Committee held its quarterly meeting Thursday, May 30 — less than 24 hours following the House’s approval of HB 6, legislation to heavily subsidize Ohio’s nuclear power plants.
Chaired by Brad Belden, president of The Belden Brick Co., the committee heard expert analysis of the nuclear bailout bill, as well as other energy issues currently before policymakers — including a provision in the House-passed version of the state budget (HB 166) that would alter Ohio’s current prohibition of excessive profits by utilities. The new language, which is opposed by the OMA, would allow FirstEnergy operating companies to keep “significantly excessive profits” rather than issuing refunds to more than a million customers.
Guest speakers at Thursday’s meeting included:
- Michael Bryson, senior vice president – operations at PJM Interconnection;
- Richard Ricks with NiSource, Columbia Gas of Ohio; and
- Susanne Buckley with Scioto Energy.
The Energy Committee’s next meeting is set for August 29. 5/30/2019
OMA’s Energy Committee heard the latest analysis of the nuclear bailout bill during its May 30 meeting.