Ohio utilities look to re-regulate market with plant subsidies under FERC scrutiny

Dive Brief:

  • American Electric Power and FirstEnergy will likely turn to the Ohio legislature to save older generation, pressing for the state to re-regulate its power markets after 15 years of competition, following federal regulators taking steps to block recent power contracts.
  • The Federal Energy Regulatory last week withdrew affiliate waivers that enabled power purchase agreements approved by Ohio regulators last month, and agreed to place the deals under enhanced scrutiny.AEP and FirstEnergy had asked Ohio to guarantee income for a group of seven coal plants and one nuclear plant through eight-year power purchase agreements. 
  • Midwest Energy News reports the legislation has been introduced in the Ohio Senate that would press customers to purchase power from the utilities, though activists are already calling foul.

Dive Insight:

It appears that AEP and FirstEnergy will advocate for Ohio to re-regulate its power markets, now that federal regulators have stepped into the fray.
AEP spokeswoman Melissa McHenry told the news outlet that the company would be staking a "strategic review" of the plants under the PPA.

“At the same time, we will also advocate for legislation in Ohio that would re-regulate generation in the state or provide a mechanism for AEP Ohio to own and develop generation assets, including the plants included in the PPA and renewables,” McHenry added.

Midwest Energy News reports Ohio Sen. Bill Seitz (R) has introduced a bill which mirrors a proposal floated by AEP last year. The bill would, among other things, financially pressure net metering customers to select the utility for its generation source or potentially relinquish some net metering benefits. 
But the news outlet also reports environmental groups are pushing back. “The bill as a whole doesn’t paint a picture for where we should be headed on Ohio energy policy,” Ohio Environmental Council's Trish Demeter told MEN. “It’s just a hodgepodge. ... “It doesn’t do anything to transition us to a clean energy future, which is where the markets are headed [and] which is what people want.”
AEP and FirstEnergy won significant victories in March when the Public Utilities Commission of Ohio unanimously approved the power purchase agreements they sought. But FERC's decision last week means the deals will be subject to FERC's affiliate abuse test, which directs companies to show evidence of either head-to-head competition, other unaffiliated buyers willing to pay similar prices for the same generation, or unaffiliated generators that have made sales at similar prices. 

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