News and Analysis
The two nuclear power plants set to receive state subsidies worth an estimated $165 million per year under House Bill 6 already could be quite profitable. That is according to a new report sponsored by the American Petroleum Institute and authored by Paul Sotkiewicz, the former chief economist for PJM Interconnection LLC, the largest U.S. power grid operator.
Sotkiewicz’s analysis shows that the costs of running FirstEnergy Solutions’ Davis Besse and Perry plants are nearly 25% below the industry average for single-reactor sites — and that they are averaging $28 million and $44 million a year, respectively, in net profits. The ratepayer-funded subsidies provided by the House-approved HB 6 would only add to that profit. 5/30/2019
On an 8-5 vote, members of the House Energy & Natural Resources Committee on Thursday, May 23, passed the nuclear power bailout bill. The approved language was the 17th version of the measure, which the OMA continues to oppose.
Supporters of Substitute House Bill 6 have dropped the pretense of carbon reduction and changed their rallying cry to energy security.
The new version of Sub HB 6 would still bail out Ohio’s two nuclear power plants, but it also would expand ratepayer-funded subsidies to two 1950s-era coal plants owned by the Ohio Valley Electric Corporation (OVEC). One of the OVEC plants is in Indiana.
The OMA Energy Committee will meet on Thursday, May 30, providing yet another opportunity for members to get an update. 5/23/2019
The new language would allow FirstEnergy operating companies to keep “significantly excessive profits” rather than issuing refunds to more than a million customers, including manufacturers.
This week, the Ohio Senate Finance Committee held hearings on the budget legislation. In written testimony to the committee, the OMA said the amendment to the SEET would do nothing to protect ratepayers.
“The amendment allows FirstEnergy to realize rapacious profits from Ohio customers,” the OMA wrote. “For these reasons, we urge the Senate to strip the unjustified and inequitable amendment from Amended Substitute House Bill 166.” See the OMA’s full testimony here. 5/23/2019
In the debate over House Bill 6 — legislation that would provide hundreds of millions of ratepayer dollars to Ohio’s nuclear power plants — millions have already been spent. That is due to an ongoing advertising blitz meant to sway public opinion.
According to Dayton Daily News reporter Laura A. Bischoff, “Generation Now, a dark money group, has spent more than $2.76 million on TV and radio ads in favor of the bill.” The group reportedly has close ties to the Ohio House Speaker, Bischoff has reported.
Of the 18 nuclear power plants in the region, Ohio’s two aging nuclear plants and the Three Mile Island facility in Pennsylvania are the only three that are unprofitable, according to a report from PJM Interconnection, an electricity transmission company. 5/23/2019
Republicans on the House Energy & Natural Resources Committee this week adopted the latest substitute version of the nuclear bailout legislation, Sub. House Bill 6. This marks the 14th version of the bill since its introduction a month ago. The OMA has been opposed to the legislation due to the new costs and risks it would impose upon manufacturers and other customers. Here is the OMA’s customer cost impact analysis.
Also this week at the Statehouse, FirstEnergy’s budget amendment — which would allow the monopoly distribution company to retain “significantly excessive” profits on the backs of captive customers — was considered in the Senate. Other legislation surfaced this week in the House that would allow utilities to capture even greater above-market costs from customers under the Electric Security Plan process.
The OMA Energy Committee meeting on May 30 will shed more light on the latest policy developments that could affect manufacturers. You can register here to join the discussion. 5/16/2019
Regional grid operator PJM‘s electricity capacity auction has been delayed from this month to August. The reason? The Federal Energy Regulatory Commission (FERC) has ruled PJM’s capacity auction rules to be “not just or reasonable” due to the proliferation of state subsidies for uneconomic power generators.
While PJM attempts to preserve competitive wholesale electricity markets, the FERC order ensures PJM’s capacity construct “will not interfere with the states’ ability to choose the path of re-regulation, whether via a conscious policy decision or a simple failure to take steps to prevent re-regulation as described on an unplanned basis.”
Manufacturers should take note of this development. The $300 million subsidy proposed by Substitute HB 6 — pending in the Ohio House — would trigger FERC’s recommended rule changes at PJM. In doing so, this would create an additional $80 million in increased capacity costs for Ohio’s two nuclear plants, both owned by FirstEnergy Solutions. Moreover, Sub HB 6 could also subsidize uneconomical coal plants and power-purchase agreements for unknown quantities of renewable energy. Each would result in what FERC describes as “unplanned re-regulation.” Unplanned re-regulation is serious — competitive electricity markets save Ohio’s ratepayers $3 billion annually.
See this memo by OMA consultant RunnerStone to learn more and see cost impacts to different sized manufacturers. 5/16/2019
Seventy-four opponents crammed into a tiny hearing room in the basement of the Statehouse this week to make the case against Substitute House Bill 6. Only two proponents appeared, and one was the bankrupt company that owns the uneconomical nuclear power plants, FirstEnergy Solutions.
The OMA was among the groups that filed testimony in opposition to the most current version of HB 6, which will cede more control to government bureaucrats in electricity pricing. The OMA testimony — delivered by Terri Sexton, Environmental & Energy Manager for Navistar — describes the numerous problems with the bill and provides precise examples of the bill’s impact on Navistar’s Springfield truck assembly plant. The OMA testimony characterizes the sub bill as “a mandated, customer-financed bailout of uneconomical power plants in the form of ‘clean air credits’ and direct subsidies.”
Opponents and proponents of House Bill 6 — the nuclear power bailout bill — are now doing battle on the public airwaves. The OMA opposes the bill, which is pending in the Ohio House.
This week, Americans for Prosperity started running a statewide radio ad on news/talk radio stations in opposition to the bailout bill. The group has said the measure would tax consumers through their monthly energy bills “in order to prop up politically favored companies.” The Ohio Consumer Power Alliance has also launched a radio ad campaign against the bill.
At the same time, Generation Now — a secretive political money group — is running a paid media campaign featuring both radio and TV spots, with more than $600,000 dedicated to broadcasting their pro-HB 6 message. This story by the Dayton Daily News examines the organization and its funding.
Also this week, Ohio State University economist Dr. Edward “Ned” Hill expressed strong opposition to HB 6 in his editorial published by Crain’s Cleveland Business. In his editorial, Dr. Hill wrote: “The bill will result in higher electricity generating and capacity charges for all Ohioans, deter investment in electricity generation not controlled by Ohio’s investor-owned utilities, lower the reliability of the state’s electric system and hurt economic development prospects.” 5/8/2019
Last week, Ohio House lawmakers unveiled a new version of the controversial nuclear bailout package. OMA experts have reviewed Sub HB 6 line-by-line and found it is not what its supporters claim. In general, the substitute version makes a series of changes aimed at protecting the profits of utilities at the expense of customers.
To help clear the confusion, read the “Ten Myths Surrounding Sub House Bill 6.” Interested OMA members will soon have another chance to get an in-depth HB 6 update and have their questions answered. Look for an email invite early next week to participate in a conference call. 5/9/2019
Mike Pandoli, owner of Berea Manufacturing — a welding shop outside Cleveland — read about the nuclear bailout legislation (HB 6) being considered in Columbus. He wrote a letter to the Speaker of the House to convey his concerns regarding the new customer charge applying to each meter in his plant. Click here to see what happened next. 5/6/2019