Energy

The regional electric grid operator, PJM, has requested the Federal Energy Regulatory Commission (FERC) to delay its capacity auction to procure new power generation yet again. Timely capacity auctions are critical to procure new power plants to replace retiring power plants.

PJM’s capacity auctions have been delayed for years, exacerbating power supply worries, especially when combined with PJM’s backlogged interconnection queue for new generation, rated among the nation’s worst. PJM’s delay comes amidst a FERC complaint and multiple challenges that its auction rules are creating paper-only supply shortages – driving up customer costs by billions with no reliability improvement. 10/14/2024

AEP Ohio’s proposal at the Public Utilities Commission of Ohio (PUCO) to establish a new rate class for data centers has seen recent activity over the past week.

The proposal would create two new classes of customers without evidence of need and without a proper cost of service study, setting a discriminatory precedent against one business type. The OMA Energy Group has filed testimony in the case urging the PUCO to reject AEP Ohio’s proposal, which is unreasonable and anti-competitive.

As part of a customer coalition, OMA Energy Group filed a joint settlement before the PUCO last week to resolve the proposal. While the majority of parties involved in the case supported the settlement, AEP Ohio has urged the PUCO to reject it.

OMA Energy Group members will be provided with a memo on the joint settlement.

FirstEnergy and AEP announced this week they are teaming with Dominion Energy Virginia to propose building transmission lines across Ohio, West Virginia, and Virginia.

The announcement comes as a result of PJM’s Regional Transmission Expansion Planning (RTEP) process, which identifies high voltage transmission solutions to regional power constraints. PJM planning documents show Ohio and AEP are positioned to export power through West Virginia to the Washington DC area, where many data centers cluster, if new transmission lines are built.

The announcement has caught attention locally, as it appears to contradict these same utilities’ claims of a local power shortage, while positioning Ohio to export its electricity out of state.10/9/2024

Congressman Troy Balderson (OH-12) recently introduced OMA-supported legislation to enable grid operators to fast-track consideration of power generation projects, the Guaranteeing Reliability through the Interconnection of Dispatchable (GRID) Power Act.

Under the GRID Power Act, the Federal Energy Regulatory Commission would have 60 days to review proposals from regional transmission organizations and independent system operators for specific projects that would be pushed to the head of interconnection queues. 9/27/2024

Todd Snitchler, President and CEO of The Electric Power Supply Association (EPSA), recently provided a keynote address at the Ohio Manufacturers’ Energy Conference emphasizing the power of markets and lambasting calls for reregulation of electric generation.

In his presentation, Snitchler highlighted why markets are best and addressed how the utility demand growth story is being manipulated to make an argument for pro-regulation at the expense of captive customers. 10/3/2024

PJM’s Independent Market Monitor published a study revealing that recent rule changes will cost customers $4.4 billion in the latest capacity auction. Dr. Joe Bowring, the Market Monitor, along with OMA energy consultant RunnerStone, explained at last week’s OMA Energy Conference that the rising power prices result not from a decrease in electric generation supply but from these administrative changes.

The study also identified market power issues, where power companies exploit a loophole to withhold renewable energy and battery storage capacity, artificially inflating prices for other thermal plants they own. This tactic allows generators to gain $4.1 billion at customers’ expense, raising significant concerns about transparency and quality that the OMA has previously highlighted to PJM’s board. 9/24/2024

PJM recently closed its transmission planning window for 2029-2032 and “did not identify new needs” for transmission expansion in AEP or FirstEnergy’s Ohio territory as part of its Regional Transmission Expansion Plan (RTEP). AEP has already secured permission for a $33 million transmission line in central Ohio, set to be completed by June 2027, aimed at accommodating anticipated load increases from data centers. AEP is collecting substantial ratepayer funds to upgrade its system in expectation of this electric load.

Additionally, PJM projects a significant increase in generation within AEP’s territory and across Ohio, with plans to export electricity to the East Coast by 2028. However, any revisions to AEP’s load forecasts could alter this outlook. The Ohio Manufacturers’ Association Energy Group has intervened in the Public Utilities Commission of Ohio to examine potential changes to AEP’s load forecasts, highlighting the need for scrutiny in this evolving landscape. 9/24/2024

This week, the Ohio Manufacturers’ Association hosted the third annual Energy Conference at the Quest Conference Center in Westerville, drawing manufacturers, stakeholders, energy experts, and lawmakers to discuss energy policy and best practices in energy management.

United States Secretary of Energy Jennifer Granholm addressed the conference via video, highlighting the key investments by the federal government in manufacturing and energy production.

“This state is at the heart of our nations economy,” Granholm said. “Ohio and the industrial Midwest are leading the pack…in manufacturing.”

Panels and presentations included discussions on energy markets, transmission costs and reliability, and energy regulation.

“The OMA believes in the power of markets, that’s part of the reason for this conference,” said John Seryak, CEO of RunneStone. “That’s why so many energy experts, industry leaders, and stakeholders are here. We believe in markets and competition.” 9/19/2024

At the Ohio Manufacturers’ Energy Conference this week, PJM’s Independent Market Monitor, Dr. Joseph Bowring critiqued the RTO for administrative rule changes that will increase electricity priced by billions of dollars per year.

Bowring also expressed his support for competitive energy markets and highlighted areas where PJM could lower costs for consumers and attract generation. 9/19/2024

The keynote speaker at the Energy Conference, former PUCO Chairman Todd Snitchler, reinforced the strength of competitive energy markets and shed light on false claims of an energy shortfall in order to justify the argument for reregulation.

“Collaboration and open, fact-based discussions are key for overturning the utilities reregulation argument,” Snitchler said. “Competition encourages innovation, frees consumers, and pushes improvement. Now is the time to stay the course on competitive energy markets.” 9/19/2024

FirstEnergy Corp. has been ordered by the U.S. Securities and Exchange Commission to pay a $100 million civil penalty for misleading investors about its role in the House Bill 6 scandal. The SEC found that FirstEnergy Corp. violated antifraud provisions by misrepresenting its role in HB 6 and failing to disclose payments related to the political corruption scheme.

This settlement follows the agreement reached in August for FirstEnergy to pay $19.5 million to the Ohio Attorney General’s Office and set aside $500,000 for an independent consultant to review FirstEnergy’s ethics policies. 9/13/2024

PJM continues to make changes to its capacity auction construct and recently wrapped up a stakeholder process reviewing the participation of energy efficiency in the capacity market. A supermajority of stakeholders agreed with a consensus position that energy efficiency should be removed from consideration in the next base residual auction, which is set for this December. Energy efficiency accounted for less than 1% of resources cleared in PJM’s most recent auction. 9/5/2024

Middle River Power will continue to operate a 540-MW gas-fired power plant rather than proceed with a planned retirement, likely due to increased revenue from PJM’s capacity market. In its 2023 State of the Market Report, PJM’s Independent Market Monitor suggested that a doubling of market revenues would reduce units identified as uneconomic by 44%, close to ~15 GW of generation. Analysts are predicting that capacity prices could continue to rise, potentially hitting the price cap, which would incentivize many more power plants to continue to operate. 9/5/2024

Rumors continue to swirl about generation re-regulation in Ohio, fueled by a falsehood that Ohio will soon face a shortage of electricity. Read OMA’s Retooling Ohio Executive Summary for a synopsis on this threat to Ohio manufacturers. The full document is also available with more information about the economic impact of ending deregulation and alternative electricity policies that can strengthen our state for the economic road ahead.

The Ohio Manufacturers’ Energy Conference on Sep. 19 will feature a keynote panel addressing PJM’s recent capacity auction, the state of Ohio’s power grid, and more. Register now to attend. 9/5/2024

Utilities have continued to stoke fears that electric demand will exceed electric supply in a few years, leading to reliability concerns. The OMA has published a Myth vs. Fact document to address common themes often heard when discussing Ohio’s power grid and its ability to reliably provide power.

While parties seeking to gain from an energy shortfall crisis claim that there is an electric power supply shortfall, our grid operator PJM has procured 18% more power than it needs during peak grid stress. 8/27/2024

This week’s heat wave pushed up power use on the PJM regional electric grid. PJM issued a rare Maximum Generation/Load Management alert for Tuesday and Wednesday to handle the high load, which it did with plenty of power generation in reserve and even in excess of its reserve requirements.

Customers contributed with load curtailment if they were enrolled in such programs and in anticipation of a coincident peak hour. Check out PJM’s markets dashboard to catch instantaneous load, electricity price, mix of renewables and fossil fuels, and generation ready to go in reserve. 8/29/2024

This week, the Public Utilities Commission of Ohio (PUCO) authorized three electric utilities to keep millions of dollars charged to customers to cover the costs of running two coal-fired plants. OMA’s energy engineering consultant, RunnerStone LLC, has calculated that Ohioans will have paid nearly $600 million in total subsidies to OVEC’s utility owners since 2017, and is expected to exceed $1 billion by 2030.

This order marks the PUCO’s first interpretation of provisions of House Bill 6 that extended cost recovery for those plants to 2030 via a new Legacy Generation Rider and enshrined the mechanism in statute. 8/21/2024

Last week, an op-ed from OMA President Ryan Augsburger was featured in UtilityDive, a national trade publication, warning against the calls to re-regulate Ohio’s energy market.

The piece highlights the strength of a competitive energy market untethered from government restrictions that can deliver reliable and affordable energy to consumers. 8/9/2024

This week according to its latest quarterly SEC filing report, FirstEnergy indicated that it will soon pay $120 million total to resolve two of the pending federal and state investigations into House Bill 6.

According to the filing, FirstEnergy has set aside $100 million to resolve the SEC investigation in addition to the $19.5 million for a civil lawsuit from the Ohio Attorney General. 8/8/2024

This week, PJM capacity prices increased nearly tenfold from $28.92/MW-day to $269.92/MW-day in the 2025/26 Base Residual Auction.

The OMA issued a statement following the announcement, citing the years of delay of PJM’s auction and rule changes as the culprit of rising prices that will be passed on to customers. The increase is estimated to cost consumers nearly $12 billion.

Utilities have been posturing for re-regulation. Recently, FirstEnergy CEO Brian Tierney described the company’s openness to owning generation. Known as re-regulation, The OMA opposes allowing utilities to operate power generation under a regulated monopoly business model.

The OMA is a longtime defender of competitive markets for power generation, believing they are far preferable to government picking winners and losers under a regulated model. This topic will be covered in depth at the OMA Energy Conference on Sep. 19. 7/30/2024