News and Analysis
Legislation may be introduced today in the Ohio House that could have far-reaching effects on electricity generation markets. This recent media report found that a draft version of the bill would, among other provisions, create a new statewide customer charge that would be used to bailout the two nuclear power plants owned by FirstEnergy Solutions.
Hearings on the bill are expected to begin next week in the House Energy & Natural Resources Committee. Rumors about the bill have been swirling for weeks and the bill is considered to be a top priority of the Speaker.
The OMA’s energy policy team is monitoring developments and will provide members with bill analyses and status.
Members of the OMA Energy and Government Affairs Committees will be invited to a special conference call next week to learn more about the bill. Watch your email or send an email to the OMA if you are interested. 4/11/2019
The regional transmission operator PJM told a House committee this week that the competitive electricity markets are lowering costs, stimulating investment, and providing system reliability in Ohio.
Stu Bresler, Senior Vice President of Operations and Markets for PJM, testified: “Ohioans, over the last five years, have seen more than $1 billion dollars in savings through our competitive markets.
“Since 2017, over ~3,200MWs of new generating capacity has come online in Ohio. An additional 7,800 MWs of new generating capacity is currently in some stage of development,” he stated.
“Although 3,000 MW of older generating units have been deactivated or retired since 2016, that generation has been replaced with more reliable and lower cost generating units. This is another indication that PJM’s competitive markets are working effectively,” said Bresler. 4/10/2019
Oil and gas development in the Appalachian Basin has brought billions of dollars’ worth of pipeline construction to parts of Ohio, Pennsylvania and West Virginia. According to an analysis by marketing agency Energy In Depth, pipeline construction projects have fed $32.6 billion of investments and generated more than 124,000 jobs.
This comes as companies have built more than 3,500 miles of pipelines in the region. According to the report, of the 25 pipeline projects approved by the Federal Energy Regulatory Commission, seven run through Ohio.
The Buckeye State has 2,167 wells producing in the Utica Shale formation, while another 875 wells have received permits and are being drilled. For more on the data released by Energy In Depth, click here. 4/10/2019
News reports this week detail recent action by federal authorities alleging that FirstEnergy and FirstEnergy Solutions have used the U.S. bankruptcy process to “scheme to” absolve former parent corporation FirstEnergy of future environmental responsibilities for power plants.
The government officials allege the companies have engaged in “abuse of the bankruptcy system.” The bankruptcy proceedings began just over one year ago.
The Office of the Ohio Consumers’ Counsel (OCC) argued that in the bankruptcy plan before the court “FirstEnergy would be shielded from any claims or causes of action related in any way to the Debtors’ businesses and property, including from any liability for the costly decommissioning of its power plants.” And, “Were funds for decommissioning to be inadequate, …, consumers or taxpayers might be (unfairly) called upon to fund FirstEnergy and FES’s power plant decommissioning liabilities to federal and state governments.”
Late yesterday Judge Koschik of the bankruptcy court issued a ruling finding that FES’s proposed release of FirstEnergy from its decommissioning and environmental obligations to the government made the underlying plan unconfirmable. “Basically the judge sent FES back to the drawing board on how to exit bankruptcy, which will trigger renegotiation of the complex settlement agreement,” said OMA’s energy counsel Kim Bojko of Carpenter Lipps & Leland. 4/4/2019
In an opinion published by the Canton Repository, Brad Belden, President, The Belden Brick Co., made the case that the PUCO should reject AEP Ohio’s filing to develop new renewable generation on its ratepayers’ dime.
Belden wrote: “The Ohio Power Co. (AEP Ohio) currently has an application pending before the Public Utilities Commission of Ohio (PUCO) that would require all AEP Ohio customers to subsidize the development of at least 900 megawatts (MW) of renewable energy. …
“… because these subsidies would be non-bypassable, all customers in AEP Ohio’s service territory, even those who already purchase power (including green power) competitively from another supplier, would have to pay the AEP Ohio renewable energy rider on the distribution portion of their electric bills. …
“The fact is, Ohio’s generation market is robust. Ohio and the surrounding region have plenty of electric generation resources to meet the electric needs of customers. …” 3/25/2019
Gov. Mike DeWIne appointed Dennis P. Deters, JD, of Hamilton Co. to the Public Utilities Commission of Ohio (PUCO) for a term beginning March 25, 2019, and ending April 10, 2021.
Deters, a Republican, is a former judge on the Ohio District Court of Appeals. He is also a former township trustee in Greater Cincinnati and a Hamilton County commissioner.
Deters was one of four finalists for the seat selected by the PUCO Nominating Council this month. Others included former lawmakers Gene Krebs and William Shuck, and former PUCO staffer Bryce McKenney.
The political makeup of the PUCO will be two Republicans, one Democrat and two independents.
The PUCO’s role is to regulate the state’s investor-owned utilities. 3/26/2019
A U.S. bankruptcy judge this week denied FirstEnergy Solutions’ (FES) request to issue expedited approval of a settlement agreement. According to this article by John Funk of the Cleveland Plain Dealer, the sticking point centers on a provision that absolves former parent company FirstEnergy Corp. of expensive remediation and decommissioning costs of both nuclear and coal power plants.
Numerous federal and state agencies cautioned the judge of the impropriety of letting FirstEnergy off the hook for known liabilities. Customers have been paying for clean-up costs for several decades but the ownership wants to escape its liability under the proposed agreement. If approved, such a move would likely transfer the clean-up costs to Ohio utility customers or Ohio taxpayers.
Also in the hearing, counsel for FES told the court that the nuclear plants may not be closed as scheduled: “… with help from our state legislators … maybe there is even hope for these units past the announced deactivation [dates],” said Brad Kahn on behalf of FES.
Hold on to your wallets and purses as FES now tries again to lever state lawmakers to give them a bailout to benefit their owners and FirstEnergy. 3/21/2019
The independent market monitor for PJM Interconnection released its 2018 State of the Market Report last week. The study catalogs unprofitable coal and nuclear power plants that operate within the PJM grid and marketplace. The report identifies three nuclear plants that are receiving market signals to retire. The list includes two Ohio nuclear power plants: Perry and Davis-Besse.
According to a summary by Utility Dive, the market monitor, Dr. Joseph Bowring, said the only plants that are not projected to meet their avoided cost each year are one-unit nuclear power plants like those in Ohio. Translation: these plants are truly uneconomic. 3/21/2019
A report finds that the Ohio Valley region will supply half of U.S. natural gas by 2040. Cost advantages for the production of natural gas liquids in the Midwest are expected to outperform the Gulf Coast as soon as 2020.
The report by IHS Markit Study released this week at the World Petrochemical Conference in San Antonio, Texas, says the Ohio Valley region “will play a key role in satisfying America’s increasing reliance on natural gas, as well as keeping energy costs moderate. Favorable production economics place the Marcellus and Utica shale plays amongst the most cost competitive in the nation.”
The IHS Markit study, commissioned by Shale Crescent USA and JobsOhio, quantifies for the first time the anticipated development and production growth emerging from one of the world’s most prolific sources of natural gas and natural gas liquids. 3/21/2019
At their meeting this week, members of the OMA Energy Committee heard a presentation by Anthony Smith and Tim Ling. Smith is Global Energy Coordinator at Cooper Tire and Rubber Company. Ling is Corporate Environmental Director at Plaskolite, LLC. The duo are heavily involved in energy policy and serve as board members of the OMA Energy Group.
They detailed the growth of electric distribution and transmission charges at a time when generation charges have been decreasing. They also described how much subsidy is now included in customers’ bills. And, they described how utilities are aggressively charging more for transmission under the guise of grid modernization.
Their conclusions about ‘goldplating’ are validated in this recent USA Today article that describes utility overspending. 3/14/2019