GOP moves to scrap Ohio renewable mandates, boost nuclear

Source: Jeffrey Tomich, E&E News reporter • Posted: Tuesday, April 16, 2019

Davis-Besse Nuclear Power Station. Photo credit: FirstEnergyCorp./FlickrThe Davis-Besse Nuclear Power Station in Oak Harbor, Ohio. FirstEnergyCorp./Flickr

Ohio Republicans have for years fought battles to rescue FirstEnergy Solutions Corp.’s two nuclear plants and do away with renewable energy and efficiency mandates.

Legislators filed a single bill Friday that would achieve both those goals.

House Bill 6 would authorize $300 million for the Ohio Clean Air Program to incentivize non-carbon-emitting generation in the Buckeye State. Sponsors said the program would also save money for consumers by doing away with more expensive green power and efficiency requirements.

“We’re trying to go from the hammer of the mandates … and instead provide a carrot,” state House Speaker Larry Householder (R) said during a news conference.

The filing of the widely anticipated bill officially launches what will be a hard-fought lobbying effort in a key battleground state for energy, where nuclear, coal, petroleum and renewable energy interests have for years battled over the future of the state’s electricity mix.

In an emailed statement, FES spokesman Tom Becker said: “We applaud the sponsors of the bill for their efforts in recognizing the important and vital role nuclear energy, along with many other clean energy sources.”

Utility FirstEnergy called the bill “a good starting point for a statewide discussion about retaining and developing clean energy resources in our state,” according to a spokesman.

But many other groups ranging from environmental and consumer advocates to the American Petroleum Institute blasted the measure as little more than a life rope for the Davis-Besse and Perry nuclear plants, which have been under economic pressure from natural gas, renewables and stagnant demand.

“The bill announced today is nothing more than another bailout tax for failing nuclear plants paid for on the backs of hardworking Ohioans,” said Trish Demeter of the Ohio Environmental Council Action Fund. “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.”

Columbus-based American Electric Power Co., which sells electricity to 1.5 million customers in the state, likewise said the bill “imposes costs while providing little benefit [to] our customers.”

“Our customers have overwhelmingly indicated their preference to clean energy resources, so we believe elimination of the current renewable mandate only makes sense if it is done in a way that promotes the use of these clean energy investments in the state,” utility spokesman Scott Blake said in an emailed statement.

AEP is also worried about the proposed elimination of Ohio’s efficiency standard, which has benefited customers, Blake said.

The Office of Ohio Consumers’ Counsel said it’s evaluating the bill’s impact on rates. But the consumer advocate said the legislation continues a long history of subsidizing electric generation in a state that deregulated its electric market years ago.

“Our preference continues to be for Ohioans to have the benefits of lower prices and higher innovation from power plant competition, without paying subsidies to power plant owners,” said spokeswoman Merrilee Embs.

‘A huge missed opportunity’

This is the third bill filed in recent years that aimed to keep FirstEnergy Solutions’ Perry and Davis-Besse plants running.

Previous proposals would have subsidized the plants through so-called zero-emission nuclear (ZEN) credits, funded by retail customers of utility affiliate FirstEnergy (Energywire, April 7, 2017).

Under HB 6, those costs would be shared statewide.

The bill would authorize the state to pay generators $9.25 per megawatt-hour of non-carbon electricity, including nuclear and renewables. According to the U.S. Energy Information Administration, the two Ohio nuclear plants generated about 18.3 million MWh in 2018, which could be worth almost $170 million in Ohio Clean Air Program payments.

The payments would be funded through fixed surcharges on consumer bills depending on the class of customer, ranging from $2.50 a month for residential customers to $2,500 a month for the state’s largest energy users.

The bill would authorize a separate program, also funded from the $300 million authorization, to reward fossil fuel generators greater than 50 megawatts, including coal-fired power plants, for reducing emissions.

“We don’t want to chase them out either,” Householder said.

Details of the so-called reduced emissions resource program would also be developed by the Air Quality Development Authority, a seven-member board of political appointees that includes heads of the state Department of Health and Ohio EPA.

Flanked by the bill’s sponsors, the House speaker said HB 6 would achieve key objectives of helping Ohio’s industrial base and adding manufacturing jobs while incentivizing lower-carbon generation.

Householder said consumers would pay less for electricity under the proposal because it would eliminate charges for renewable energy and efficiency mandates, which he said are “failing miserably.”

“Those mandates really didn’t do anything,” he said. “They were just a hammer to get us to an area that someone predetermined that was where we needed to be.”

Like nuclear subsidies, the debate over renewable energy standards in Ohio isn’t new.

In 2014, the Legislature froze the standards for two years. But former Gov. John Kasich (R) vetoed a subsequent bill in 2016 that would have extended the freeze.

Dan Sawmiller, Ohio energy policy director for the Natural Resources Defense Council, said the legislators’ continued focus on the costs of the clean energy standards in HB 6 ignores the benefits of the programs, including reduced emissions, jobs and reduced energy use from utility efficiency programs.

And unlike legislation in states like Illinois and New York, which paired nuclear subsidies with help expanding wind and solar energy as a strategy to reduce carbon emissions, there was no such deal negotiated in Ohio.

“It was a huge missed opportunity,” Sawmiller said. “In Ohio, stakeholders in the energy space were ready to have that conversation.”

FES bankruptcy

The first hearings on HB 6 will occur soon, according to the bill’s sponsors. And Householder said he hoped the bill could pass by the end of June.

The debate will play out as Akron-based FES continues to work through bankruptcy. The FirstEnergy affiliate, which operates nuclear and fossil generation and a retail power marketing unit, filed for Chapter 11 protection just more than a year ago.

Just before its bankruptcy filing, the company notified grid operator PJM Interconnection LLC of plans to deactivate all three of its nuclear plants — including the Beaver Valley plant in Pennsylvania — by 2021 absent changes that allow the reactors to run profitably.

The 900-MW Davis-Besse plant is 42 years old and is licensed to operate through 2037. The 1,260-MW Perry plant began operating in 1987 and is licensed to run until 2026. Together, the plants employ more than 1,400 people and contribute more than $30 million in state and local taxes annually, FES has said.

David Griffing, vice president of regulatory affairs for the company, told a legislative committee last month that the nuclear plants remain cash-flow positive, but that will change by 2021-22 based on forecast energy and capacity prices.

Griffing cited studies that said replacing the energy and capacity from the two nuclear plants would increase the average cost for residential consumers in Ohio by $35 a year from 2022-29 and as much as $68 annually after that.

But Stu Bresler, a senior vice president for PJM, testified earlier this month that the deactivation of the nuclear plants is not expected to adversely impact the reliability of the PJM system and could be mitigated by $24 million of transmission upgrades.