Ohio House halts hearings on FirstEnergy subsidies
May 18--COLUMBUS -- The president and CEO of FirstEnergy Corp. today sought to keep legislation providing customer subsidies for its two struggling nuclear power plants on track in the Senate even as the House has halted hearings on a similar measure.
"I don't think it necessarily puts an end to it (in the House), but I didn't think anything was going to get done in the short term here either," Chuck Jones said after testifying before the Senate Public Utilities Committee.
"We're going to keep working it," he said. "We're going to keep talking to them."
Senate Bill 128, like an identical bill in the House, would create Zero Emission Nuclear credits, financed by Akron-based FirstEnergy distribution customers, to generate an estimated $300 million for the two nuclear power plants operated by subsidiary FirstEnergy Solutions.
Sen. Bill Beagle (R., Dayton), chairman of the Senate committee, plans to continue hearings through June, knowing that they may have to take a back seat to budget hearings. He's not talking about a vote anytime soon.
"There seem to be questions about whether this is the right thing to do for a lot of reasons," he said.
The company has warned that the money-losing Davis-Besse plant near Oak Harbor and the Perry plant east of Cleveland could be permanently shuttered absent a guaranteed market for the more expensive power they generate. The plants have been unable to compete economically with cheap and abundant natural gas.
The charges would be paid by FirstEnergy customers on the distribution side of their bills regardless of whether they choose to buy their power from the subsidiary. The amount would be capped at 5 percent, translating into about $5 more a month on a typical residential customer's bill of $125.
The roughly $300 million a year, extrapolated over the full potential 16-year life of the credits, could total $4.8 billion, assuming FirstEnergy's Beaver Valley nuclear power plant on the Ohio River shore in Pennsylvania is not deemed eligible for the credits.
The issue of a potential FirstEnergy Solutions bankruptcy hovered over the Senate hearing as senators questioned the long-term viability of the power plants on the other end of that process. Once valued at $11 billion, Mr. Jones said the two plants are now on FirstEnergy's books at just $1.5 billion while carrying about $3.5 billion in debt.
If they close, they will never be ramped up and put back into service again, he said.
After the hearing, Mr. Jones stressed that FirstEnergy Solutions has been spun off with its own board of directors that will make such decisions about bankruptcy.
"They're looking at that right now," he said. "That decision could come at anywhere between today and six months from now. ... Even if that happens, and there's no future for these plants to be part of FirstEnergy, I will continue to fight for this legislation because it's still the right thing to do."
He has argued that Ohio should value these plants as major employers, as energy suppliers that do not directly contribute to carbon air pollution, and as a reliable and resilient energy source that adds diversity and security to Ohio's electricity grid.
Opponents of this bill and its equivalent House Bill 178 counter that it asks FirstEnergy customers to bail out the company for poor decisions to double down on nuclear and coal power before hydraulic fracturing opened up abundant reserves of shale natural gas.
They also argue that it would interfere with a competitive electricity market that is currently driving investment in natural gas plants.
FirstEnergy owns no natural gas plants.
Only FirstEnergy's 2 million distribution customers would pay the credits to shore up the nuclear plants.
"We're going to be the only ones paying for this, but everyone else is going to get the benefit," said Sen. Sean O'Brien (D., Cortland), noting that the nuclear power would be fed into the regional, multi-state distribution grid and not kept just in Ohio.
In Illinois and New York, the credits are spread across all electricity customers in those states.
"The decision (to halt House hearings) reflects the growing, diverse coalition that is challenging unnecessary subsidies to FirstEnergy, which would raise electricity rates and hurt the state's economy," said Dick Munson, director of Midwest Clean Energy. "We hope Ohio policymakers will instead focus on spurring investment and innovation in reliable, efficient, and clean energy markets."
Contact Jim Provance at: firstname.lastname@example.org or 614-221-0496.
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