Ohio lawmakers have delayed a critical vote on a controversial energy bill that would charge the state’s utility customers hundreds of millions of dollars to subsidize two nuclear power plants that their owner, bankrupt utility FirstEnergy Solutions, has threatened to close without financial support.
On Wednesday, the Ohio House of Representatives failed to bring to a vote House Bill 6, forcing the legislature to put off consideration of the bill until it reconvenes in August. House Speaker Larry Householder said the late-night decision was due to the absence of four representatives who planned to vote yes on the bill, adding that the House would “tentatively” take it up again on Aug. 1.
It’s a surprise setback for a bill that was seen as a priority in the House, where it was passed by a 53-43 vote in late May. But some significant amendments emerged in the Senate bill that was passed by a 19-12 vote on Wednesday. Those included a last-minute addition that would delay until 2021 the monthly customer charges that will collect the roughly $150 million per year to support the Davis-Besse and Perry nuclear power plants.
FirstEnergy Solutions, the power plant unit of Ohio-based FirstEnergy Corp., filed for Chapter 11 bankruptcy protection last year. After failing to win federal support for its ailing nuclear and coal fleet, it turned to state lawmakers, setting a July deadline for legislation to support its nuclear plants, and threatening to close them in 2020 and 2021 if the state doesn't take action.
Bailing out the Davis-Besse and Perry plants is expected to save about 4,500 jobs and retain a chief carbon-free energy resource for the fossil-fuel-heavy state. Other states, including New York, Illinois and New Jersey, have given financially struggling nuclear power plants incentives to keep their carbon-free generation capacity running, as part of a broader policy push toward decarbonizing their energy sectors.
An outlier among state nuclear bailout plans
But Ohio’s bill is different, opponents say, because it also guts the state’s energy efficiency spending and renewable energy mandates — something that Ohio's Republican legislators have been trying to do for years.
HB 6 would also shift the costs of some of the country’s oldest coal-fired power plants from utilities to ratepayers for a decade to come. The result, opponents say, will be higher electric bills, more pollution and reduced investment and innovation in modern energy infrastructure for the state.
The bill would replace today’s monthly surcharges on utility customers’ bills, which now pay for the state’s energy efficiency and renewable energy mandates, with a new set of lower surcharges. These will pay for FirstEnergy’s two nuclear power plants, as well as two coal-fired power plants operated by Ohio Valley Electric Corp. (OVEC) and jointly owned by the state’s investor-owned utilities.
The new surcharges will supply FirstEnergy with about $150 million a year through 2026, giving OVEC about $50 million a year through 2030. While the monthly charges involved vary widely depending on the size and class of utility customer, data presented in the most recently amended version of the legislation states that residential customers are paying an average of $4.74 a month for efficiency and renewables, compared to $1.92 a month for the combined power plant subsidies.
Backers of the bill had hoped the House would concur with the Senate’s amended bill on Wednesday, sending it to Gov. Mike DeWine for his signature before FirstEnergy’s deadline passed this week. But analysts and advocates tracking the bill have noted conflicts between the state’s Republican-controlled House and Senate, including the House’s pledge that the bill will end up reducing customers’ monthly surcharges overall, that could make its smooth passage more challenging.
The last-minute amendment setting a two-year delay in the monthly surcharges to pay for the FirstEnergy bailout, estimated to range from 85 cents for residential customers to $2,400 for big industrial customers, might be explained as an effort to meet that reduction goal. The amendment “is likely part of a strategy to deliver on promised net-rate reductions that House lawmakers have insisted upon since the debate over this measure began earlier this year,” Rob Rains, analyst with Washington Analysis, noted in a Thursday email.
But as opponents including the Union of Concerned Scientists, The Sierra Club and the Natural Resources Defense Council have pointed out, monthly payments for energy efficiency and renewable energy represent investments in lower bills and cleaner energy for Ohio ratepayers. HB 6 ends those investments, in exchange for monthly payments that at their best support out-of-market payments for nuclear power plants, and at their worst help keep some of the state’s worst-performing and polluting coal plants running far past their logical retirement date.
Efficiency, renewables, natural gas and consumers groups are opposed
The Senate version of HB 6 differs from the original House bill’s approach to moving utility funding away from efficiency and renewable energy and toward nuclear and coal subsidies, Neil Waggoner, Ohio campaign representative for the Sierra Club, said in a Tuesday interview.
For example, the House version of the bill would have entirely eliminated Ohio’s current 12.5-percent-by-2026 RPS and cut all the monthly surcharges paying for energy efficiency and demand-reduction programs, which have saved Ohio customers $5.1 billion from 2009 to 2017, according to the Midwest Energy Efficiency Alliance.
But the version passed by the Senate opts for changing the targets for both programs in ways that will effectively end further investment, he said. For the efficiency standard, the bill will reduce today’s top energy-efficiency targets for utilities from 22.2 percent to 17.2 percent — a measure that many of the state’s utilities have likely already achieved — while expanding options for large industrial customers to opt out of paying.
And instead of ending the RPS, HB 6 now reduces it to 8.5 percent by 2026, along with excluding large industrial customers accounting for one-quarter to one-third of the state’s total electricity load from the calculation.
HB 6 is being opposed by groups representing residential ratepayers and commercial-industrial energy users that worry it will increase energy prices and undermine free-market energy competition. Competing natural-gas-fired power plant owners are also crying foul, with one, LS Power, threatening this week to end a planned 500-megawatt expansion of its Troy, Ohio facility if HB 6 is passed.
HB 6 does provide $20 million a year, amounting to a total of $140 million through 2026, to support utility-scale solar development, including six solar farms already being built that might have lost funding under previous versions of the bill. And the Senate stripped a House amendment that would have allowed county residents to block wind farm projects on unincorporated land via referendum, even if construction had already begun.
As for the argument that HB 6 was necessary to keep FirstEnergy’s carbon-free nuclear plants up and running, “if we want to have a conversation about keeping carbon emissions in Ohio low, we need to talk about how we replace these nuclear plants with clean energy,” Waggoner said. “The legislature isn’t asking that question. They have never had that question in mind. Their only concern from day one has been how...[to] increase these customer bills to bail out these plants.”
Rains noted that another amendment to HB 6 added this week would weaken the Public Utilities Commission of Ohio's oversight of how FirstEnergy, as the company to receive the “clean air credits” to be created by HB 6, spends its money.
“Language supporting annual audits for recipients from the clean air credits program was dropped in favor of much more flexible disclosures by qualifying firms to the commission on an annual basis,” he wrote.