Energy Management

FERC Rule Change Could Trigger New Electricity Costs

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

Opponents Pile on Against Nuclear Bailout Legislation

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.”

The bill has so many issues that it has united groups on the political right, like Americans for Prosperity, and groups on the left, like the Environment Defense Fund. 5/9/2019

Public Campaigns Begin For, Against Energy Bailout Bill

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

Substitute House Bill 6: Still a Duck

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

In His Own Words: The Real Costs of HB 6

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

Pennsylvania Nuke Bill Short Circuits

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

Question: When is ‘Excessive’ Profit Not Enough?

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

Anti-Market Nuclear Bailout Bill Advances

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.

Manufacturers wishing to contact their state representatives on HB 6 can use this sample letter. Please be sure to copy the OMA. 5/2/2019

House Budget Includes Another FirstEnergy Handout

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.

EIA: Renewables Growing Rapidly as Electricity Generation Fuel Source

Renewable sources for electricity generation are growing rapidly, according to a report by the U.S. Energy Information Administration.

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