The campaign by Ohio-based FirstEnergy Solutions (FES) to win a customer-paid subsidy for its nuclear plants by the end of June, courtesy of state lawmakers, has bogged down.
The Energy and Public Utilities Committee of the Ohio Senate will hold a rare Saturday morning hearing this weekend, but has not yet announced when it will vote on its rewrite of House Bill 6, a proposal developed by the House in April specifically designed to assist FES.
The Senate committee on Thursday heard from about 40 opponents of a slimmed down version of the legislation and initially scheduled another hearing for late Friday, only to cancel it Thursday evening, giving the committee another day to tinker with the bill.
The Senate rewrite of the legislation drops the pretense of creating a "clean air program" as the House called the subsidy legislation.
Instead, the Senate's Substitute HB 6 would create an "Energy Generation Fund" without a mention of combating carbon dioxide emissions.
One reason for that may be that the Senate version earmarks about $10 million a year to assist the development of renewable energy projects.
It would also shunt a total of about $150 million a year to FES for its two Ohio nuclear plants on Lake Erie — Davis-Besse, 24 miles east of Toledo and Perry, 35 miles east of Cleveland. The legislation as approved by the House would provide FES with about $160 million annually, paying $9 for each megawatt-hour generated.
But unlike the House version, the Senate bill would demand annual audits of the FES subsidies and allow state regulators to eliminate the payments if outside auditors determined they are were no longer needed.
The Senate version keeps in place renewable energy mandates, but reduces them to a maximum of 8.5% of total power sold by 2026. The House version of the bill would eliminate the renewable energy mandates on Jan. 1, 2020. Current law calls for 12.5% by 2026.
The Senate keeps in place earmarks added in final versions of the House bill to provide roughly $60 million annually to the Ohio Valley Electric Corp. (OVEC), a company jointly created by the state's utilities in the 1950s at the request of the Defense Department to power a uranium enrichment plant.
The DOD no longer needs that power and OVEC sells the output from its two large coal-burning plants, one in Indiana and one in Ohio, into wholesale markets, often at a loss.
The cost of the subsidy program to consumers under the Senate rewrite would now be just 80 cents per month, commercial customers $11 and industrial customers $240. The largest industrials would pay $2,400.
FES has said it must decide by the end of June whether to order fuel rod assemblies for the early spring refueling of its Davis-Besse nuclear plant or close it in May 2020 as it previously announced.
Senate Republican leaders insist that the FES deadline is arbitrary in their view and said they will take as long as necessary to develop a bill that opponents can live with.
Approval of the funds that FES is seeking could be key to the company emerging from bankruptcy protection later this summer when its creditors will vote to accept or reject a plan making them owners of the new company. FES filed for bankruptcy protection from its creditors on Mar. 31, 2018.
FES was an unregulated subsidiary of FirstEnergy Corp., which announced as early as 2016 that it wanted to spin off FES or close its power plants if it could not get federal or state subsidies.
The Federal Energy Regulatory Commission blocked an earlier deal that FirstEnergy had worked out with Ohio regulators allowing FirstEnergy to buy all of the power the FES plants generated — and sell it into wholesale markets at a loss, which FirstEnergy customers would pay through an increase in delivery rates.
Unregulated power companies, including those companies that have built new gas turbine power plants in Ohio or purchased old coal plants from Ohio utilities and are running them profitability, are not entitled to state subsidies.
For that reason, many of the opponents of House Bill 6 see the legislation as the first step toward re-regulation or at least government intrusion into market competition.
“Fundamentally the bill remains a bailout of aging nuclear power plants, at public expense, for bankrupt FirstEnergy Solutions and its big Wall Street creditors,” wrote a witness for the Ohio Consumers’ Counsel in testimony submitted Thursday. “And it enables a continued bailout of the 1950’s OVEC coal power plants, at public expense.
“Even in its improved form, the bill will transfer about a billion dollars in above-market charges from Ohio families and businesses to FirstEnergy Solutions’ investors. That is bad," the testimony said.