December 14, 2014

Ohio's Electricity Providers Seeking State 'Bailout'

Debate Comes Against Backdrop of Frozen Energy Standards in Ohio

The three largest electricity providers in Ohio — FirstEnergy (the Northeast Ohio-based company we'll focus on here), AEP, and Duke — are hoping the state will approve individual plans to keep their older power plants operating. The proposals — "bailouts," essentially, as critics put it — would lock in fixed-rate contracts for customers, regardless of fluctuating market price.

For FirstEnergy in particular, the proposal would simply guarantee/force a market for energy produced at plants owned by its deregulated subsidiary, FirstEnergy Solutions — the Davis-Besse nuclear power plant near Toledo and the coal-fired W.H. Sammis power plant (see photo) on the Ohio River. The proposal covers 15 years.

But here's the central issue, as reported by the Union of Concerned Scientists: 

The catch is that all parties to the proceeding — even the utilities — acknowledge that the market price for electricity will almost certainly remain lower than the proposed contract price for at least the next three years, costing consumers hundreds of millions of dollars. 

Opponents of the plans charge that these plants will remain, as data suggests, outdated and inefficient, only driving up costs in the short- and long-run and obstructing movement on renewable energy production. The provisions on the table to keep Ohio's coal power plants in demand are ones being eyed with great interest and scrutiny, especially given Ohio's current state of static energy standards. 

Gov. John Kasich has been silent on the bailout issue, though he did champion free-market energy production earlier this year in signing SB 310 into law (a bill that freezes renewable energy standards for two years — a bill, to be sure, that was pushed into the Statehouse focus by the very companies now seeking more cash money from customers). Columbus Business First reports that the process to study renewable energy standards is not off to a great start.

Last month, the Public Utilities Commission of Ohio did approve FirstEnergy's plan to cut consumer efficiency programs at year's end.

Regarding the electricity providers' requests before the Public Utilities Commission: “They will rule on it when they are ready,” PUCO spokesman Matt Schilling told the Columbus Dispatch earlier in the fall. 

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