A proposed consumer bailout of FirstEnergy Solutions and its two northern Ohio nuclear power plants would provide the company nearly $150 million per year while also offering millions to other zero-carbon-emissions power generation in the state.
Each residential electricity customer in Ohio would pay a $2.50 per month surcharge to be earmarked for a new Ohio Clean Air Program under a bill introduced in the Ohio House on Friday. The House is expected to make it priority legislation.
Backers of the bill stressed that, overall, residential and business customers users would pay less per month in surcharges because the proposal will do away with the state’s current charges for alternative energy and efficiency mandates.
“Let’s face facts. We’re not getting what we bargained for through those mandates,” House Speaker Larry Householder, R-Glenford, said Friday. “Yes, they may be doing some encouragement as far as folks coming into Ohio to try and sell electricity, but at the end of the day we’re not lowering our carbon footprint in the state of Ohio with these mandates.”
Former Gov. John Kasich blocked efforts of fellow legislative Republicans to end renewable energy standards or make them voluntary.
Instead of mandates, Householder said the new Ohio Clean Air Program would offer companies $9.25 for every megawatt hour of zero-carbon electricity.
The state’s two nuclear power plants, Davis-Besse in Ottawa County and the Perry plant in Lake County, generate about 16 million megawatt hours each year, qualifying them for $148 million of the estimated $300 million that the new surcharges would generate annually.
The two nuclear plants generate about 90 percent of the zero-carbon electricity in Ohio, a Householder policy official said. Solar, wind, hydro or other zero-carbon power producers also would be eligible for the $9.25 credits.
“It’s about all of the above,” Householder said. “I’m a believer that we need various energy sources in the state of Ohio.”
The bill will not address Ohio’s wind farm setback rules that green energy advocates say hinder the development of wind power generation in the state.
The proposal comes as FirstEnergy Solutions works to emerge from bankruptcy as part of a separation from its parent company, FirstEnergy Corp. The company has said that without legislative relief, it will close both nuclear plants by 2021.
Householder downplayed the impact on FirstEnergy and its nuclear plants, though he has called it a mistake to allow the plants to close. He said he focused on goals of encouraging Ohio power generation, incentivizing cleaner air, and helping create and maintain Ohio energy and industrial jobs.
“I haven’t been paying that much attention to the nuclear situation,” said Householder, who, along with his supporters running for House seats received significant political contributions from FirstEnergy in the last election cycle. “I haven’t been following the bankruptcy that close.”
The program would be operated by the Ohio Air Quality Development Authority, which, under the plan, also would be encouraged to develop a new emissions reduction program that would allow some gas and coal-fired plants to also qualify for subsidies if they lower emissions. Details of that program are not yet developed.
But Trish Demeter, vice-president of energy policy with the Ohio Environmental Council Action Fund, said she rejects that the bill is for the benefit of cleaner air.
“The bill announced today is nothing more than another bailout tax for failing nuclear plants paid for on the backs of hardworking Ohioans,” she said. “Adding insult to injury, the proposed bill would dismantle one of the only state policies that reliably deliver electric bill savings to customers, decrease air pollution, and create new jobs in Ohio.
Stu Bresler, senior vice president of operations and markets for PJM Interconnection, which coordinates the movement of wholesale electricity in all or parts of 13 states, including Ohio, told lawmakers this week that deactivating Ohio’s nuclear plants “is not expected to adversely impact the reliability” of the system.
To deal with the closures, Bresler said PJM would make upgrades and request plant output adjustments. The total cost of the upgrades to Ohio ratepayers, he said, is about $24 million.
In 2018, nuclear made up 11 percent of electricity generated in Ohio, according to PJM, compared to 33 percent for coal, 25 percent for natural gas and 1 percent for wind. Another 6 percent was from miscellaneous sources and the remaining 24 percent was imported.
“…Efforts to subsidize less competitive plants will result in higher power prices for Ohioans,” Bresler told a House committee. “Such actions have the potential to roll back the progress and stability that the markets have facilitated. Such actions could prevent the building of more efficient and cost effective plants, including cleaner technologies like solar and wind.”
Subsidies, he said, could increase costs upward of $3.8 billion across PJM’s territory.
Lee Davis, CEO of Lightstone Generation, which in January 2017 spent $2.2 billion on two natural gas power plants and one coal plant in southern Ohio, urged lawmakers this week to reject nuclear subsidies.
“Those who have a long-storied history of inefficient operations now stand the chance to be rewarded for their inability to compete in the marketplace,” Davis told a House committee. Such subsidies “will create a chilling effect on investors like us as well as those who will be forced to pay the subsidy.”
Householder said the $2.50 monthly residential surcharge under the Clean Air plan would be $1.89 less than what residents are currently paying for mandates on their electric bills. The monthly surcharge would be $20 for commercial customers (19 percent less), $250 for industrial (20 percent less) and $2,500 for very large users (89 percent less).
“Closing Perry and Davis-Besse would be the equivalent of adding 2 million cars onto our roads and 9 million tons of carbon dioxide and other pollutants into our air,” Akron Mayor Dan Horrigan said in support of the plan. “If the nuclear plants go away, they will be replaced by fossil-fuel burning plants that pollute our air and contribute to climate change.”