News and Analysis
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.
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