Ohioans still paying massive coal plant subsidies under House Bill 6

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COLUMBUS, Ohio—While state lawmakers have repealed a controversial $1 billion-plus bailout of two Ohio nuclear power plants passed under House Bill 6, another part of the scandal-ridden law still on the books is expected to cost Ohio ratepayers even more money to subsidize two 1950s-era coal plants in Ohio and Indiana.

And while some state lawmakers are pushing to eliminate the subsidies, which a recent study found could cost Ohioans a total of $1.8 billion by 2030, there currently isn’t enough support in the Republican-dominated state legislature to pass such a repeal.

That’s even though they’ve repealed other parts of HB6 – including the nuclear bailout – as Republican ex-House Speaker Larry Householder and others were charged with using $60 million in FirstEnergy Corp. bribe money to get the bill passed.

Millions of ratepayers in Ohio — as well as six other states – pay money through their utility companies to cover debts for the Kyger Creek plant in Clifton, Ohio and the Clifty Creek plant in Madison, Indiana. Both plants are operated by the Ohio Valley Electric Corporation, which is owned by more than a dozen utility companies, including American Electric Power, Duke Energy, AES Ohio (formerly called Dayton Power & Light), and two subsidiaries of FirstEnergy Corp.

The plants were built in the mid-1950s to provide power to a uranium enrichment plant in Southern Ohio. The enrichment plant closed in 2003, but OVEC decided to keep them running. To do so, OVEC spent more than $1.3 billion on “scrubbers” to reduce the plants’ sulfur emissions. In addition, the cost of generating power from the plants has been far higher than market prices, according to a study released last month by the Ohio Manufacturers Association.

AEP, Duke, and AES Ohio customers have already been paying for years to help keep the plants in operation, under proposals approved by the Public Utilities Commission of Ohio. HB6 codified those subsidies into state law through 2030.

The energy law also mandated that, starting in January 2020, FirstEnergy customers had to begin paying subsidies for the plants.

Exactly how much each Ohio utility customer pays to subsidize the coal plants varies month to month, depending on the wholesale energy market and other factors.

HB6 caps monthly OVEC charges at $1.50 per month for residential customers. Duke Energy, AEP Ohio, and AES Ohio residential ratepayers currently pay an average of $1.30, $1.07, and $1.06 per month, respectively, according to officials with the respective companies.

Customers with FirstEnergy subsidiary Allegheny Energy Supply don’t pay any OVEC-related subsidies, according to FirstEnergy spokesman Mark Durbin. Durbin stated in an email that he didn’t have a breakdown of the average amount paid by customers of Monongahela Power Company, another FirstEnergy subsidiary, but he added it “would be very low,” as only about 0.3% of the power purchased by Mon Power comes from OVEC power plants.

Bipartisan bills to repeal the OVEC subsidies have been introduced in both the Ohio House and Senate. While lawmakers have held a handful of hearings on each of the bills, House Majority Floor Leader Bill Seitz, a Cincinnati Republican who was a key supporter of HB6, said in an interview that neither has the support needed to pass the legislature and go to GOP Gov. Mike DeWine, who signed HB6 but now favors repealing and replacing the law.

“We’ve beat this horse to death. It’s not going to change,” Seitz said. “They’ve introduced God knows how many bills — none of them are going anywhere, in my humble opinion.”

The backstory of the subsidies

Critics say the OVEC-related subsidies were only added to HB6 by Republican state lawmakers in order to win support for the controversial legislation from powerful utilities in the state at a time when it wasn’t fully clear whether there were enough votes to pass the bill.

They note that, for example, that a top AEP Ohio official initially testified only as an “interested party” about the initial version of HB6 and expressed some reservations about the bill, but then became a proponent of the legislation after the OVEC language was added.

“How did coal get added? Because they probably couldn’t make (HB6) work without coal,” said state Rep. Jeff Crossman, a Parma Democrat. “They just decided to add it, codify it, and make (utilities) happy to get the support that they needed.”

When asked whether AEP Ohio changed its stance on HB6 because lawmakers amended the OVEC provisions into the bill, company spokesman Scott Blake didn’t directly answer.

“The final version of the bill addressed a wide range of energy issues, and AEP Ohio supported the enacted legislation as a whole,” Blake stated in an email.

Seitz disputed that the OVEC provision was added just to get utilities on board with the bill.

He noted that in the previous legislative session, he and then-Speaker Ryan Smith, a Gallia County Republican, sponsored a bill similar to the OVEC language in HB6.

“So it’s not like that was a brand-new topic,” he said.

Seitz, who as a state senator chaired the Senate Public Utilities Committee, said he wanted to address OVEC, the nuclear bailout, and the elimination of Ohio’s green-energy mandates in separate bills. But he said Householder’s tactic was to pass all three measures at the same time.

“The genius of Householder was, ‘To hell with that – let’s do it all in one bill,’” Seitz said. “And I said, ‘Well, that’s fine with me.’”

What supporters say

Backers of the OVEC-related subsidies, including top GOP lawmakers and powerful utilities who have financial stakes in the plants, provide a range of reasons why they help consumers.

If HB6 is fully repealed and the charges go away, OVEC would not close either Kyger Creek or Clifty Creek, Justin Cooper, OVEC’s vice president, chief operating officer and chief financial officer, told state lawmakers in June. But Cooper said the money provides financial stability for OVEC, and removing the HB6 rider could hurt the corporation’s credit rating.

If the coal plants make money, customers would be credited money on their electric bills instead of having to pay charges. So far, that hasn’t happened. But during legislative testimony, Amy Spiller, president of Duke Energy Ohio and Duke Energy Kentucky, likened the OVEC charges to paying for an insurance policy, saying that HB6 protects her company’s ratepayers against unexpected upswings in wholesale energy prices.

Duke Energy even disputes that the charges their customers are paying under HB6 should be called a subsidy for OVEC, as technically ratepayers’ money is sent to the utility, not directly to OVEC, said company spokeswoman Sally Thelen in a statement.

Seitz said in an interview that repealing the OVEC language in HB6 would “put our Ohio investor-owned utilities at a competitive disadvantage to the other (out-of-state) owners of OVEC, who all get cost plus rate of return.”

Seitz said that HB6′s $1.50-per-month limit is lower than what the PUCO previously approved for AEP, Duke and AES Ohio customers.

“And it’s good to have some coal (plants) around,” he said, adding that coal has become Germany’s top electricity source despite efforts to switch to renewable energy power plants.

What opponents say

Critics of the subsidies for the coal plants — which include lawmakers on both sides of the aisle, as well as environmental, good-government, and manufacturing groups — say that Ohio residents shouldn’t be forced to pay extra money to help big utility companies operate aging coal plants, especially given that one of them is in Indiana.

Earlier this week, Crossman and state Rep. Casey Weinstein, a Hudson Democrat, made the five-hour drive from Northeast Ohio to Madison, Indiana, a city of about 12,000 people along the Ohio River, to see the Clifty Creek plant for themselves.

“The plant dominates the town,” Weinstein said in an…

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