News and Analysis
Just as in Ohio, lawmakers in Pennsylvania have been asked to pass legislation to bailout uneconomic nuclear power plants in the Keystone State. The Associated Press is reporting that a financial rescue is now off the table and unlikely to advance in the foreseeable future. Here is a fun, brief video that explains the issue. 5/9/2019
Answer: When you are FirstEnergy.
Undeterred by the massive bailout request pending in sub House Bill 6, lobbyists from the Akron-based utility were able to get a provision tucked into the state budget bill, House Bill 166.
Monopoly electric utility companies are heavily regulated by the Public Utilities Commission of Ohio (PUCO) in order to protect customers from price gouging. Under Ohio law, electric utility companies are entitled to enjoy just and reasonable profits. The law authorizes PUCO regulators to limit monopoly profits. The provision now contained in HB166 would allow FirstEnergy operating companies to keep “significantly excessive profits” rather than refund them to consumers.
The OMA provided testimony against the anti-consumer amendment and urged lawmakers to strip the proposed change. 5/8/2019
Unswayed by more than 100 individuals and organizations that have presented concerns with House Bill 6, the House Energy Generation Subcommittee this week voted to accept a substitute bill, advancing the controversial measure to the full Energy and Natural Resources Committee for a possible vote next week.
Last week, the OMA expressed opposition to HB 6. This week, members of the OMA Energy Committee and Government Affairs Committee participated in a special update and briefing on the bill.
OMA staff is still reviewing the House revisions to the massive biennial budget bill, House Bill 166. One glaring energy policy change in the House proposal would deny customer refunds for Ohio Edison’s significantly excessive profits, further eroding customer protections. This provision would be in addition to the hundreds of millions of dollars that FirstEnergy would obtain from customers under House Bill 6.
The EIA forecasts that renewables — which include wind, solar, and hydroelectric — will produce 18% of all U.S. electricity this year, and almost 20% in 2020. The EIA also predicts that wind generation will surpass hydroelectric generation to become the leading source of renewable generation in both years. Overall, natural gas is expected to continue its dominance as a fuel source for electricity production, accounting for 37% of all U.S. electricity generation this year and 38% in 2020.
In Ohio — the nation’s eighth largest net electricity producer — coal remains the largest fuel source at 47%, followed by natural gas at 35%, according to the EIA. Industrial sites account for roughly one-third of all Ohio’s electricity consumption. 5/1/2019
On Wednesday at the Ohio Statehouse, Whirlpool Corp.’s Senior Manager of Government Relations Luke Harms testified on behalf of the OMA at a hearing on House Bill 6 — legislation that would impose new charges on electric customers in order to subsidize uneconomic generation facilities. (Harms’ testimony begins at 36:19 of this video.)
The OMA opposes HB 6 and was one of 100 organizations or individuals testifying this week against the proposal. If passed and signed into law, the aggregate cost of HB 6 to Ohio customers is estimated to exceed $300 million per year, indefinitely.
In his testimony before the House Energy Generation Subcommittee, Harms told lawmakers HB 6 would create “multiple new costs and new forms of costs for manufacturers.” He also noted that the bill seemingly would penalize companies like his that are using renewable, on-site electrical generation.
Also appearing at Wednesday’s hearing on behalf of the OMA were OMA Energy Counsel Kim Bojko, partner at Carpenter Lipps & Leland LLP, and Anthony Smith, Global Energy Coordinator at Cooper Tire & Rubber Company.
Later in the day, Ohio State University economist Dr. Edward “Ned” Hill expressed strong opposition to the bill, calling it “crony capitalism.” In his testimony (beginning at 2:22:45 of this video), Hill told lawmakers that HB 6’s “subsidies without end” would be “fundamentally detrimental to the state’s economic development,” potentially deterring future private investment in Ohio’s generation market. 4/25/2019
This week, 100 individuals and organizations offered testimony in clear opposition to House Bill 6, the recently introduced nuclear power bailout legislation. OMA members are invited to learn more about the new costs that would be imposed by the legislation at a 3 p.m. briefing on Tuesday, April 30. Members can register to join via conference call — or attend in-person — by e-mailing the OMA or calling (800) 662-4463.
During the HB 6 briefing, we will review this manufacturing impact analysis by OMA energy engineering firm RunnerStone, as well as this legal analysis by OMA Energy Counsel Kim Bojko of Carpenter Lipps & Leland. Members will also get an update on the status of the bill.
In spite of the widespread concern expressed this week, House Republicans seem intent on advancing this bad legislation, possibly as soon as next week. Concerned manufacturers should express opposition to their state representatives now. 4/25/2019
A new report by Cleveland State University’s Energy Policy Center reveals that investment in the shale energy sector in eastern Ohio has reached $74 billion since tracking began in 2011. Findings of the study were reported by JobsOhio.
Indirect investments, such as development of new manufacturing in the area as a result of lower energy costs, were not included in the study.
Other recent studies have estimated that the Utica and Marcellus shale regions in Ohio, West Virginia and Pennsylvania will soon supply as much as 45% of U.S. natural gas production. 04/23/2019
Advocates of saving Ohio’s two nuclear power plants appeared this week before a Statehouse panel to support House Bill 6. If passed and signed into law, the bill would impose new customer charges that would be used to subsidize uneconomic nuclear power plants. Introduced last Friday by Reps. Jamie Callender (R, Lake County) and Shane Wilkin (R, Highland County), HB 6 is being fast-tracked and has already received two hearings this week.
Testifying as a proponent, power plant owner FirstEnergy Solutions was joined by local government officials from affected communities that want to save jobs at the nuclear plants and preserve sources of local tax revenue. The bankrupt FirstEnergy subsidiary justified the proposed subsidies by stating that the bill would bring environmental benefits.
The House Energy and Natural Resources Subcommittee on Energy Generation will meet again next week — on both Tuesday, April 23, and Wednesday, April 24 — when opponents are expected to present their testimony. 4/18/2019
On Monday, the U.S. Supreme Court declined to take up a pair of cases challenging state nuclear subsidies in cases brought by advocates for natural gas-fired power plants.
The Electric Power Supply Association (EPSA) contested state subsidies for nuclear plants in New York and Illinois. The case has ramifications for Ohio, which is considering a new form of nuclear power subsidies (see separate article on House Bill 6). The Electricity Consumers Resource Council (ELCON) issued a statement highlighting the threat posed by state-approved nuclear bailouts to industrial customers.
Still pending before the Federal Energy Regulatory Commission (FERC) is a proposal from regional grid operator PJM Interconnection to address nuclear subsidies in market pricing. Alternative proposals are pending at PJM and could have significant cost impacts for customers on the wholesale market. The issue will be discussed at the May 30, 2019, OMA Energy Committee meeting. 4/15/2019