COLUMBUS, Ohio—After 14 weeks of legislative negotiations, intense lobbying, and a deluge of ads, Ohio lawmakers on Tuesday gave final approval to legislation to subsidize nuclear and coal power plants with millions of dollars from the public and effectively gut the state’s green-energy mandates for utilities.
House Bill 6, which passed 51-38, was quickly signed into law by Gov. Mike DeWine on Tuesday afternoon. Under the bill, from 2021 until 2027, every Ohio electricity customer would have to pay a new monthly surcharge that ranges from 85 cents for residential customers to $2,400 for large industrial plants.
Starting next January, ratepayers around the state would also have to chip in up to $1.50 monthly (and up to $1,500 per month for commercial and industrial users) to subsidize coal plants in Ohio and Indiana run by the Ohio Valley Electric Corporation.
However, HB6 would effectively stop Ohio’s decade-old energy-efficiency and renewable-energy mandates for utilities, which currently cost residential customers an average of $4.74 per month, according to cost charts provided by the Ohio Senate committee that heard the bill.
That means by 2027, residential ratepayers would, overall, save an estimated $3.78 per month over what they pay now, according to the charts.
State Rep. Shane Wilkin, a Highland County Republican who voted for HB6 on Tuesday, said the bill would save Ohioans a total of $1.3 billion on their electric bills.
“That is real savings to ratepayers,” Wilkin said.
Nuclear bailout
Of the $170 million per year brought in from the new surcharge, $150 million of that would go FirstEnergy Solutions to bail out its two Ohio nuclear power plants – Davis-Besse near Toledo and Perry northeast of Cleveland. The remaining $20 million per year will go to support six solar power projects being built in rural areas around the state.
FirstEnergy Solutions, which is involved in bankruptcy proceedings, claims (without giving specifics) that the plants are unprofitable and will close in the next couple of years without financial help, devastating nearby communities and putting more than 1,400 people out of work.
FirstEnergy Solutions representatives repeatedly told lawmakers that it needed the subsidies approved by June 30, because it had to decide by then whether to order $52 million worth of nuclear fuel for Davis-Besse.
Under the final version of the bill, FirstEnergy Solutions won’t get a dime in subsidies until 2021. But Senate President Larry Obhof said last week that he was told that FirstEnergy Solutions is OK with the timeline.
“The timing of [the subsidies], I think, was less relevant than the certainty,” Obhof said.
Critics of the nuclear bailout say the state shouldn’t be handing over such a large amount of money to a private company with few or no strings attached. (The bill requires state regulators to conduct an annual financial “review” of FirstEnergy Solutions between 2022 and 2026 based on the company’s internal audits).
Opponents have also said the bailout would hurt Ohio’s growing natural-gas industry.
Earlier this week, New York-based LS Power announced that if HB6 passed, it would abandon its planned $500 million expansion of its natural-gas power plant in Troy, north of Dayton.
Coal plant subsidies
HB6 would collect $50 million per year from Ohio ratepayers through 2030 to subsidize two OVEC coal-fired power plants -- one in Ohio, the other in Indiana.
OVEC was created in the 1950s to provide power for a U.S. military uranium enrichment plant in southern Ohio, but that plant closed in 2001, and now the two coal plants often sell power at a loss.
Three Ohio utilities that co-own OVEC -- AEP, Duke Energy, and Dayton Power & Light – have already been collecting subsidies from their customers based on their power usage. But under HB6, customers of FirstEnergy Corp. in Northeast Ohio would also have to pay subsidies to those three other utilities, even though FirstEnergy Corp. no longer owns a stake in OVEC. (FirstEnergy Solutions, a subsidiary of FirstEnergy Corp. that’s trying to break away from the company, owns FirstEnergy Corp.’s former share of OVEC and won a court ruling allowing it to withdraw from OVEC.)
The bill leaves it up to the Public Utilities Commission of Ohio to decide how much FirstEnergy Corp. ratepayers should be charged.
Energy mandates
In 2008, Ohio lawmakers passed requirements that by 2027, utilities must obtain 12.5 percent of their power from renewable sources such as wind and solar, as well as slash customers’ power usage by 22 percent through energy-efficiency programs.
But a number of lawmakers – mostly Republicans, who dominate both the Ohio House and Senate – have worked for years to eliminate the mandates, saying they are an example of government overreach, raise electricity costs, and are no longer needed thanks to the rise of cheap natural gas.
The final version of House Bill 6 technically keeps the mandates in place. But it ends the energy-efficiency standards for each utility once it achieves a 17.5-percent power reduction – a level that most utilities are already close to reaching. It also would allow utilities to use “banked” energy savings in past years – that is, energy usage reductions beyond the state mandates – and apply them to future years, meaning the companies wouldn’t have to take as much action going forward to increase consumers’ energy efficiency.
In addition, HB6 scales back Ohio’s renewable-energy goal from a maximum of 12.5 percent by 2027 to 8.5 percent by 2026 – the level that, under current law, utilities must reach by 2022.
Legislative maneuvering
HB 6 has created some strange bedfellows. Supporters of the measure include labor unions, nuclear power advocates, and local officials from areas near the nuclear plants; critics include environmental groups, the fossil-fuel industry, renewable energy companies, and some small-government activists.
The bill’s highest-profile supporter is House Speaker Larry Householder, who guided a bill through the Ohio House that would scrap the green-energy mandates altogether and provide $180 million for the nuclear plants.
However, the final version of the bill was modified to its current form in the Senate, which passed the legislation last week.
The House was set to concur with the Senate’s changes last Thursday, but that vote was delayed because three key “yes” votes were absent that day.
House leadership arranged for some lawmakers to use a state plane to fly from a Council of State Governments conference in Chicago to Columbus to participate in the vote, according to the Dayton Daily News. However, those plans were canceled after the Daily News’ report.