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State should not bail out old nuclear power plants

State should not bail out old nuclear power plants

Vindicator Editorial: June 24, 2019 at 12:00a.m.

State should not bail out old nuclear power plants

www.vindy.com

By now, Mahoning Valley residents will have seen the television commercial that features individuals who tell sob stories about losing their jobs if House Bill 6 does not become law.

The measure, which passed the Republican-controlled House with 10 Democratic votes, is now before the GOP-controlled Senate.

The falsely named “Ohio Clean Air” bill – the word “bailout” is avoided like the plague – is expected to win Senate approval and to be signed into law by Republican Gov. Mike DeWine.

But here’s the kicker regarding the TV ad airing in the Valley: It urges residents to contact area Sen. Michael Rulli, R-33rd, and tell him to vote for HB 6 for the good of the state.

Rulli, who won election in November, would be well advised to consider the ramifications of bailing out the Perry and Davis-Besse nuclear plants that are slated to close by 2021.

If the bill becomes law, First Energy Solutions would receive $170 million a year that would be paid by all households and businesses in Ohio – even those that do not receive their electricity generated by the two plants.

Not only does the financial involvement by government in a private company run counter to Republican political orthodoxy, but Rulli is undoubtedly aware that the Ohio Manufacturers’ Association is opposed to the measure.

In addition, workers in the legitimate clean-energy industry and those involved in energy efficiency are against the state propping up two nuclear power plants that are on their last legs.

In addition, a provision in the bill obligates many Ohio ratepayers to subsidize two coal-fired plants.

As Cleveland.com, the Plain Dealer’s online edition, noted in a recent editorial, HB 6 has become “a platter of goodies for deep-pocketed special interests who spent liberally – not just in advocating for this legislation, but also on [state Rep. Larry] Householder’s efforts to get his supporters elected or re-elected, so they could choose him as speaker.”

Householder’s ally

Cleveland.com noted that one of Householder’s allies is Rep. Nino Vitale, a Republican from Urbana. Vitale is chairman of the Ohio House Energy and Natural Resources Committee.

The newspaper noted that the chairman revealed his disdain for those who could be hurt by the bill’s elimination of requirements that utilities help customers save on energy use by saying in an email that “a little hunger in the belly of being a little cold on some really cold days” can be a good thing.

As Sen. Rulli, whose district includes Mahoning and Columbiana counties, contemplates the state bailing out the aging nuclear plants, we would urge him to ignore the false television commercial about clean energy and talk to a major investor in the Valley, Bill Siderewicz, president of Clean Energy Future.

Clean Energy has launched a $900 million gas-powered electricity generating plant known as Lordstown Energy Center, which is providing a major economic boost to the region.

A second Lordstown plant, to be called Trumbull Energy Center, is on the verge of becoming a reality.

Siderewicz said recently that he and his partners are putting together $925 million in financing, but he is concerned about the state propping up the two northern Ohio nuclear power plants.

The president of CEF warned that passage of HB 6 could harm the two Lordstown facilities. Each one is designed to generate 940 megawatts of electricity.

Here are some numbers Rulli and other area state legislators should consider as they decide on Ohio’s energy future: Trumbull Energy Center is expected to bring $1.8 billion in economic benefits to the state from construction to 40 years of operation, including payments to local schools and governments.

Gas transportation and purchases will add another $10 billion in economic benefits, according to the company’s website.

CEF is promoting the new plant, which will employ natural gas-fired combined cycle turbine technology and catalytic converters, as a source of clean, if not renewable, energy, according to a website that focuses on construction equipment.

Clean Energy Future notes that natural gas plants have 90 percent less air emissions than coal-fired plants for typically regulated emissions.

Here’s some advice for Sen. Rulli and other area state legislators: Don’t be swayed by the advertising scam perpetrated by First Energy Solutions to win support for the state bailout of its two nuclear power plants.

LINK:  http://www.vindy.com/news/2019/jun/24/state-should-not-bail-out-old-nuclear-po/

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Akron Beacon Journal

Beacon Journal/Ohio.com editorial board: FirstEnergy rider lacks incentive

www.ohio.com

FirstEnergy landed in a vulnerable financial position, the result of its own decision-making and a changing marketplace in which the Akron-based power company struggled to adjust. The Public Utilities Commission of Ohio wants to see upgrades in the electricity transmission grid, as part of serving customers better. The commission worried that a financially strapped FirstEnergy would have problems investing adequately and cost-effectively in the necessary modernization.

So, in 2016, the commission supported something called a distribution modernization rider, a fee, in effect, charged to ratepayers, amounting to roughly $3 per month. The revenue, ranging as high as $204 million a year, would improve FirstEnergy’s credit rating, the company avoiding junk-bond status and thus in a stronger position to invest.

Did the rider work as an incentive for FirstEnergy to upgrade transmission?

On Wednesday, the Ohio Supreme Court said no, holding in a 4-3 decision that the rider did not function the way an incentive should. Writing for the majority, Justice Michael Donnelly argued that the commission failed to establish how, precisely, the infusion of money would operate as an inducement to get the company to make grid improvements. The court is right that the commission did not construct “real requirements, restrictions or conditions.”

So was this a matter of “wishful thinking” by the commission, as the ruling put it, or worse, a big bailout? The court ordered an end to the rider. Yet the matter is more complicated, as indicated by the three other opinions, one concurring and two in dissent. For example, Justice Patrick Fischer, in a dissent joined by Chief Justice Maureen O’Connor, noted the law at issue does not define what is meant by “incentive.” Neither does it set conditions or otherwise lay out a course for the commission to follow, except “to examine the reliability of the utility and ensure aligned expectations and sufficient resources.”

In that way, the commission did implement a monitoring mechanism. A third party, Oxford Advisors, reported on Friday that FirstEnergy has taken steps toward transmission upgrades as a result of the rider and that its improved financial position has contributed. More, the company has pending before the commission a comprehensive settlement plan that includes investing more than $500 million during the next three years in grid modernization.

In part, the argument among the justices serves as an invitation to the legislature to recast the law. Legislators could make more clear the workings of an incentive. It is worth exploring, too, the proposal of state Rep. Mark Romanchuk, a Mansfield Republican. He wants ratepayers to get a refund when the courts overturn riders approved by the commission, this FirstEnergy rider not the first.

As it is, ratepayers are not in position to receive repayment of the roughly $400 million generated by the distribution modernization rider. There is no provision in the law for a refund. One belongs there as a measure of accountability.

FirstEnergy made trouble for itself in moving so aggressively in the deregulated market. When the energy landscape shifted, the company scrambled, even for survival, and it still faces challenges. It also is telling the company has launched down a path to becoming, again, a fully regulated utility. The rider was a financial lifeline, and if, in the view of the court majority, the commission overreached, it also took practical aim at avoiding a messy outcome.

The rider was due to expire at the end of the year, anyway, though FirstEnergy had applied for another two years. Now the legislature would do well to weigh the shortcomings in the law identified by the court, doing more to ensure that ratepayer money goes to a good and defined purpose.

LINK:  read:https://www.ohio.com/opinion/20190620/beacon-journalohiocom-editorial-board-firstenergy-rider-lacks-incentive

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The Columbus Dispatch:

Q&A: FirstEnergy Solutions’ nuclear bailout bill, what HB 6 means to you

A sense of urgency and a flurry of ads surround House Bill 6, the controversial legislation that would bail out Ohio’s two nuclear plants.

Unless legislators act this summer, FirstEnergy Solutions, the owner of the Davis-Besse and Perry nuclear plants in northern Ohio, says it will proceed with plans to shutter the plants over the next two years — eliminating 1,400 jobs and damaging the rural economies in the area.

At the same time, what would be the biggest overhaul of the state’s energy laws since Ted Strickland was governor has turned into a tug of war over broader issues of renewable energy, bailouts of private companies and politics.

Pressure to support the bill has been intense.

For example, a multimillion-dollar statewide television, radio and mail campaign is in full swing, and local public officials and a cadre of industry lobbyists are pushing for the bill. Democrats have been pressed by a variety of trade unions.

Environmentalists, some business groups, and oil and gas interests have been fighting the legislation, and House Democrats have rolled out their own clean energy bill with the goal of having half of the state’s electricity come from renewable sources by 2050.

The bill, passed by the Ohio House 53-43 in May, now is before the Senate Energy and Public Utilities Committee, where hearings and testimony are underway.

Here’s where the legislation stands, and how it got to this point.

Question: What’s changed since the bill was first introduced?

Answer: Plenty.

The bill began with the notion of imposing monthly fees on residential, commercial and industrial electricity consumers and using that money to create the Ohio Clean Air Program. The money mostly would be used to help the nuclear plants, but it also would provide incentives to develop renewable sources of energy and for fossil-fuel plants to reduce emissions of carbon dioxide.

What finally emerged from the House is a bill that not only bails out the two nuclear plants, but also two coal-fired power plants, one in Ohio and one in Indiana, which are owned by a group of power companies including Columbus-based American Electric Power. The changes also would make it harder to develop wind farms like those in western Ohio.

Still in the bill is the elimination of surcharges for energy efficiency and renewable energy and the requirement that the state’s power companies get 12.5% of their electricity from renewable sources by 2027.

Q: What exactly would the current version of the bill do?

A: If the legislation passes in its current state, consumers initially would be charged 50 cents a month on their electricity bills, with the fee rising to $1 a month in 2021 for six years.

Commercial customers would pay $10 a month next year and $15 after that; industrial customers would pay an average of $250 a month; and companies that use larger amount of electricity would pay more.

The bill is expected to raise nearly $200 million a year, which would be used primarily to support FirstEnergy Solutions, the former power generation arm of Akron-based FirstEnergy, which is working to emerge from bankruptcy protection. The rest of the money would go to help power companies developing five solar farms in the state.

Backers say the legislation would help save consumers money because it would eliminate the fees they pay to support energy efficiency and renewable power. Those surcharges are running about $4.50 a month for residential customers and are scheduled to increase to $8 to $9 per month in two years, they say.

Opponents say the efficiency program has saved $5 billion worth of energy consumption, far more than the cost of the fee.

In addition, the bill would put into law what already is policy for Ohio Valley Electric, a consortium of electricity companies including American Electric Power, which owns old, coal-fired power plants in Ohio and Indiana.

If the plants sell electricity cheaper than what it costs to produce, AEP and the other utilities are allowed to recover that cost from customers. If the plants sell electricity at a profit, customers get a credit on their bill.

The bill would cap the monthly fee at $2.50 for residential customers. The provision would run through 2030.

The total cost of shoring up the nuclear and coal plants under the life of the bill is $1.6 billion, with $1.2 billion for FirstEnergy Solutions, according to environmental groups.

Q: Why are the nuclear plants in trouble?

A: Blame cheap, abundant sources of natural gas being discovered in eastern Ohio and other parts of Appalachia, which has pushed down wholesale prices of electricity. FirstEnergy Solutions says the nuclear plants are unprofitable, but opponents say that is untrue.

Q: The legislation is being pitched as a clean-energy bill, but does it really do anything for clean energy?

A: The state’s two nuclear plants do generate 90% of Ohio’s carbon dioxide-free energy, and there is help for a few solar projects already underway in Ohio.

Proponents say that if the nuclear plants are shut down, the loss would have to be made up from fossil fuel-powered plants that would make Ohio’s air dirtier.

Beyond that though, the legislation would do little for clean energy. In fact, the bill would make it harder to develop wind projects in the state by allowing townships to conduct referendums on these projects. Wind farm projects are already hindered by a 2014 law that put restrictions on where wind turbines can be placed.

mawilliams@dispatch.com

@BizMarkWilliams

LINK:  read:https://www.dispatch.com/business/20190619/qampa-firstenergy-solutions-nuclear-bailout-bill-what-hb-6-means-to-you

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