Coal Plant Owners Fight To Protect “The Worst From Bad Subsidies”
Grant? What subsidy?
Three Ohio utilities and a representative from the coal-fired power plants they jointly own appeared before a Senate committee on Tuesday to defend an estimated $ 700 million grant they are expected to receive from taxpayers through 2030.
The committee met to consider a bipartisan effort to repeal the grant, which was codified in 2019 through legislation that is now at the center of a criminal prosecution against the former House speaker and his allies.
Sen. Mark Romanchuk, Ontario’s top Republican seeking to repeal the bailout, said the Ohio Energy Deregulation Act 1999 requires a utility to operate “fully on its own.” on the market. So why, he asked Amy Spiller, head of Duke Energy, is Duke receiving a grant for his losses incurred through his stake in Ohio Valley Electric Corp. ?
“It’s not a subsidy,” she said. “OVEC factories, as was confirmed this morning, are actually economical, they participate in the wholesale market in addition to serving other purposes. It is not a subsidy that ensures the continued exploitation of unprofitable productive resources.
Regardless of the label used, utilities recoup their OVEC losses from all Ohio taxpayers. Ownership of OVEC, formed in the 1950s to power a nuclear facility now closed for the federal government at Piketon, is split between American Electric Power (43% equity), Buckeye Power (18%), Duke Energy (9%), AES Ohio (4.9%) and others.
Companies billed $ 114 million in 2020 to taxpayers alone through the “Legacy Generation Resource” endorsement, according to a spokesperson for the Ohio Utilities Commission.
OVEC has two factories, one in Indiana and the other in Ohio, which are heavily in debt due to large capital investments. An analysis by the Ohio Manufacturer’s Association, which opposed the bailout, also found that OVEC had been selling electricity at a loss since 2012.
The OMA has estimated that bailouts will amount to $ 700 million by 2030, although that ultimately depends on energy markets.
U.S. coal production has fallen since 2012, according to data from the U.S. Energy Information Agency. Ohio produced about 26,000 tonnes of coal that year and less than 8,000 in 2019. Meanwhile, national natural gas production has exploded.
PUCO initially approved utility requests to apply the “riders” to customer bills to help cover OVEC losses through 2024. Regulators said the rider would act as a “hedge” against market volatility – that’s a subsidy in bad times, but in theory, credit in good times.
However, PUCO said the runner never acted as a credit. Marc Reitter, vice president of regulation and finance for AEP, conceded as much when answering a question from Senator Teresa Fedor, D-Toledo.
“Since the Legacy Generation Rider was adopted, there has been no credit,” he said.
Reitter said Senate Bill 117 threatens the “stability” of OVEC because it would remove “financial coverage against extreme weather events.”
OVEC executive Justin Cooper, interviewed by Romanchuk, admitted that repealing the subsidy would not shut down the plant.
House Bill 6 – now at the center of the US Department of Justice’s case against Ohio Rep. Larry Householder – codified the bailouts and extended them until 2030. Residential taxpayers are currently paying up to $ 1.50 per month and manufacturers pay up to $ 1,500 per month per month.
Federal prosecutors have built their racketeering case around Householder by focusing on a separate bailout of planned legislation for two nuclear power plants. Lawmakers canceled nuclear subsidies last year, but coal bailouts remain.
“The worst of bad grants”
Ohio Consumer Council Director Bruce Weston, the state’s watchdog for taxpayers, issued a statement criticizing the legislation that led to the bailouts.
“In their June 15 testimony against Senate Bill 117, Ohio utilities lined up to preserve their $ 700 million bailout for coal-fired power plants at state expense,” he said. he declared.
“Getting the people of Ohio to subsidize AEP, Duke and AES for OVEC’s coal-fired power plants may be the worst of the bad house-tainted Bill 6 grants. This is because the subsidy fees for coal-fired power plants are a double whammy for consumers, with higher and more electricity bills. air pollution.”
Fedor, in an interview after the hearing, criticized OVEC staff for claiming at one point not to know the amount of OVEC debt. She said it’s clear corporate sponsors are receiving grants, but asked why this was allowed in the first place.
“Consumers never get the benefit they claim to get with such a great deal,” she said. “To me, it is the sale of snake oil on behalf of the PUCO that allows this type of regulatory regime to be put in place in Ohio.”
Sierra Club campaign manager Neil Wagoner said comments from utilities that OVEC is in any way economical stopped him in his tracks.
“It looks like they were trying to avoid it being a grant, but if it’s not a grant, I don’t know what it is,” he said.
A spokesperson for Duke, in response to inquiries, highlighted Spiller’s remarks that Duke’s customers do not provide a subsidy to OVEC. He also provided details about the rider.
“To date, Duke Energy Ohio residential customers each pay Rider LGR approximately $ 1.16 on their monthly utility bill,” he said. “However, depending on the different forces in the energy markets, it is possible that Rider LGR will turn into a credit on customer bills in the future.”
Romanchuk did not respond to an interview request.
This story was republished from the Ohio Capital Journal under a Creative Commons license.