Ohio businesses and homeowners are a big step closer to picking up the tab for their utilities’ uneconomical power plants, after the state House passed a bill last week to subsidize existing coal and nuclear capacity while cutting back on renewable energy and energy efficiency programming.
The bill now goes to the Republican-controlled state Senate for debate, where clean energy supporters are hoping for revisions. The nuclear bailout already has the blessing of Gov. Mike DeWine.
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“Advocates and analysts are trying to make sense of a plan that seems to defy political and economic logic: It would support uneconomical power plants by increasing costs for businesses and homeowners, both with new charges on their bills and through the cancellation of programs that help them save money on energy,” InsideClimate News reports. “If it becomes law, it would mean Ohio is decisively turning away from policies that aid the transition to renewable energy.”
“Ohio is moving in an unprecedented and troubling direction with this bill, which is quite dramatically different from how other states are handling similar issues,” said Kit Kennedy, senior director of the Natural Resources Defense Council’s climate and clean energy program.
“Ohio would be the fifth state to subsidize nuclear power plants that otherwise might close for financial reasons, following Connecticut, Illinois, New Jersey, and New York,” InsideClimate explains. “The difference is that the other four passed nuclear aid as part of a package that included support for renewable energy, part of a larger strategy to promote carbon-free electricity generation.”
Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, said the Ohio bill only makes sense as a bailout for FirstEnergy Solutions, which filed for bankruptcy and petitioned for a bailout last year. “Though the plants have taken aggressive measures to cut costs, the market challenges facing these units are beyond their control,” President and Chief Nuclear Officer Don Moul said at the time.
Though the company was directing its plea at the time to Trump Energy Secretary Rick Perry, InsideClimate says FirstEnergy Solutions was also the main architect of the state bill. “They’ve proven to be much better at generating income through lobbying than through running their utility company,” said Ohio State University economist Ned Hill.
If adopted, “the bill would impose a statewide charge of US$1 per month on households for a ‘clean air program’; businesses would pay higher charges. Nearly all of the $190 million to be raised would go to the two nuclear power plants,” InsideClimate states.
“In addition, the bill would allow a separate charge of up to $2.50 per month to guarantee profits at the two coal-fired power plants—one in Ohio and one in Indiana—owned by Ohio Valley Electric Corporation (OVEC). This provision, added to the bill during weeks of testimony and debate, helped to win support from the utility American Electric Power, which owns about 40% of OVEC and has long pushed for this kind of guarantee to help keep the 1950s-era plants in operation.”
The bill’s backers say it’ll still save money—by repealing state benchmarks for utilities’ renewable energy and energy efficiency performance that cost about $4.60 per ratepayer per month to implement.
“But this tally of shifting charges misses the point that energy efficiency programs lead to savings for consumers,” InsideClimate notes. “From 2009 to 2017, the energy efficiency programs implemented by Ohio utilities led to savings of $5.1 billion, according to an analysis of regulatory filings by Midwest Energy Efficiency Alliance. Energy efficiency also helps to slow the growth of electricity demand, which reduces the need to build new power plants.”
Which means that “no analysis can reach the conclusion that reducing efficiency results in lower bills or cleaner air,” Rob Kelter, senior attorney for the Environmental Law and Policy Center, told a House committee last month.
InsideClimate News says the bill is raising hackles across the ideological spectrum, with “left-leaning” groups appalled at the renewables and energy efficiency cuts and the right contending that it favours political insiders over the needs of the public. “People constantly underestimate the audacity of rent-seeking in the electricity marketplace,” said Travis Kavulla of the conservative R Street Institute, a former Montana utility commissioner, using an economists’ term for lobbying that produces subsidies with no public benefit.
“At the same time, the bill has the support of some labour unions that represent plant workers, a power bloc that often leans toward Democrats,” InsideClimate notes. “Support from labour is one reason that 10 Democrats voted for the bill.”
