Ohio reverses course, repeals $1B in nuclear subsidies

Source: By Jeffrey Tomich, E&E News reporter • Posted: Thursday, March 11, 2021

The Ohio House yesterday voted to repeal the bulk of a contentious energy law adopted two years ago that would send more than $1 billion in subsidies to the state’s two nuclear power plants.

The 86-7 vote to pass H.B. 128 comes eight months after federal prosecutors charged former House Speaker Larry Householder (R) and four associates with running a $61 million racketeering scheme to pass the energy law known as H.B. 6 (Energywire, July 22, 2020).

Householder was among those who voted to repeal much of H.B. 6 yesterday. The former speaker, who was reelected last fall, continues to serve in the House while he awaits trial.

While not a dime was ultimately collected from Ohio ratepayers to save the Davis-Besse and Perry nuclear plants, state Rep. Dick Stein, a nuclear advocate and a Republican co-sponsor of the repeal bill, said the scandal-tainted energy law did its job keeping the reactors running.

“What we’ve done here with H.B. 128 is simultaneously save the nuclear industry here in Ohio while at the same time saving ratepayers well over $1 billion,” Stein told House members.

Public officials, including Gov. Mike DeWine (R) and Attorney General Dave Yost (R), had urged for the repeal of H.B. 6 last summer in the wake of the public corruption scandal and charges filed against Householder and others.

A lawsuit filed by Yost halted collection of funds from Ohio utility customers that was supposed to begin in January (Energywire, Dec. 22, 2020).

Democrats and some GOP members of the Legislature pushed for months to repeal all or parts of H.B. 6. But it wasn’t until the nuclear plants’ owner, Energy Harbor Corp., signaled that it no longer stood to benefit from the payments because of federal rule changes that state GOP lawmakers went along with a repeal of the nuclear subsidies.

The Federal Energy Regulatory Commission’s minimum offer price rule (MOPR) in the PJM Interconnection capacity market shifted the political dynamic in Ohio.

Stein, speaking on the House floor yesterday, said it was President Biden’s election and his stance toward fossil fuels that changed the fate of Ohio’s nuclear fleet.

Not all Republican legislators agreed.

State Rep. Laura Lanese (R) said Energy Harbor, the former FirstEnergy Corp. subsidiary that authorized an $800 million stock buyback after exiting bankruptcy, simply didn’t need the subsidy. She said the fact the company never opened its books to prove its financial need is further proof of that.

“The perception is that we’re the handmaiden of the utilities, and I don’t think that’s a good perception for us,” said Lanese, who sought a full repeal of H.B. 6.

Coal bailout remains in place

Lanese voted against the bill yesterday not because of the parts of H.B. 6 it repealed, but because of what it didn’t repeal: a bailout of two 1950s-era coal plants along the Ohio River owned by the Ohio Valley Electric Corp (OVEC).

OVEC is owned by a consortium of utilities under an agreement that aims to keep the coal plants running for the next 30 years. H.B. 6 included subsidies to benefit the plants, which critics say are both bad for consumers and the environment.

“OVEC is an important omission in this bill,” Lanese said.

H.B. 128 also repealed a controversial decoupling provision of H.B. 6 that benefitted FirstEnergy’s Ohio utilities. It did not wipe out $20 million in subsidies for several large solar projects in the state.

Environmental groups said nothing short of a full repeal of H.B. 6 is enough.

“H.B. 128 is not the full repeal of H.B. 6 that Ohioans want and deserve,” Miranda Leppla, vice president of energy policy for the Ohio Environmental Council Action Fund, said in a statement.

Also at the center of the H.B. 6 fallout is Akron-based utility FirstEnergy, the previous owner of the nuclear plants that provided funding to a dark money group run by Householder for the purpose of advancing the bill.

Separately yesterday, Ohio utility regulators voted to expand an audit of FirstEnergy in the wake of the utility’s recent U.S. Securities and Exchange Commission disclosure concerning misclassified transactions.

The order directs the consulting firm hired to audit FirstEnergy utilities’ distribution system costs to also review the transactions disclosed in the SEC filing to determine if they involved ratepayer funds and whether refunds are warranted. The audit is due on May 17.

The audit is among several ongoing reviews of FirstEnergy by the Public Utilities Commission of Ohio in the wake of the H.B. 6 scandal.

However, it is the first commission action triggered by disclosure by Akron-based FirstEnergy that “certain transactions … were either improperly classified, misallocated … or lacked supporting documentation.”

The utility has also disclosed that a $4 million payment was made in early 2019 to a soon-to-be-named Ohio regulator, who’s believed to be former PUCO Chairman Sam Randazzo. FirstEnergy later said the payment, purportedly made to end a consulting agreement, “may have been for purposes other than those represented.”

The payment in question was the reason behind the termination of former FirstEnergy CEO Chuck Jones and several other top executives.

Robert Kelter, an attorney for the Environmental Law & Policy Center, said the audit approved by PUCO yesterday is a step in the right direction. But it falls short of the broad investigation that regulators should undertake to help unwind all of the complex ties between FirstEnergy, Ohio lawmakers, dark money and the former PUCO chairman.

ELPC and the Ohio Environmental Council have asked the commission for such an investigation. PUCO hasn’t ruled in the case.

“If you don’t have a comprehensive investigation, you’re not going to get to the truth,” he said.