Critics take aim at HB 6 coal subsidies
Electrical pylons. Photo from Getty Images.
A 2019 energy bill at the heart of a historic Ohio scandal has plenty of critics and it contains plenty of provisions of which they’re critical.
There’s more than $1 billion to prop up two nuclear reactors that supposedly can’t compete on their own. And there’s $102 million in annual revenue guarantees for FirstEnergy, a company that federal authorities say helped bankroll a $61 million scheme to pass House Bill 6 — the legislation that contained the guarantees.
A Franklin County judge has stopped the collection of the nuclear bailout and legislation that would repeal it has been filed. Ohio Attorney General Dave Yost sued to end the revenue guarantees — and FirstEnergy later agreed to forego them.
But part of the law that still stands always seemed like a non sequitur for what was originally touted as a “clean energy” bill.
House Bill 6 also provides $233,000 a day in subsidies to prop up two 66-year-old coal plants — the Kyger Creek Plant in Cheshire, Ohio, and the Clifty Creek Plant in Madison, Indiana. Almost $100 million has been collected for the effort so far, according to a subsidy tracker maintained by the Ohio Consumers’ Counsel, the state’s official utility watchdog.
The agency believes the effort is wrongheaded.
“The bailout of the outmoded, uneconomic, and polluting coal power plants… shared by AEP, DP&L, and Duke may rate as even worse than the nuclear bailout,” the consumers’ counsel, Bruce Weston, testified on Tuesday before the Senate Energy and Public Utilities Committee. “The coal bailout should be repealed. And the (Public Utility Commission of Ohio) should be prohibited from reinstating the coal plant subsidy.”
Last summer, federal authorities arrested then-House Speaker Larry Householder, R-Glenford, and four associates in connection with the effort to pass HB 6. U.S. Attorney David M. DeVillers said it was “likely the largest bribery and money-laundering scheme ever in the state of Ohio.”
Despite outrage over the scandal, the Republican-controlled legislature last year didn’t manage to send a repeal of HB 6 to Gov. Mike DeWine.
This year, however, efforts to repeal the nuclear bailout and FirstEnergy’s revenue guarantees appear to have momentum. One has passed out of committee and the other has passed the Senate.
But the three bills aimed at getting rid of the coal subsidies? Not so much. Each has been assigned to a committee, but none has had a hearing.
One possible reason is that benefits from the coal subsidies are spread among some of the biggest utility players in Ohio: AEP, Duke Energy, and Dayton Power & Light.
Earlier this month, as he announced that FirstEnergy would give up its revenue guarantees, Yost, the attorney general, said the coal subsidy was created to broaden support for HB 6.
“It appears to me that that was a coalition-widening thing that (Householder) used to get more people on board with the House Bill 6 coalition,” Yost said. “As you recall, there was a lot of resistance to House Bill 6. It was a close vote there was a lot of arm-twisting going on and a lot of attempts at persuasion.”
The subsidies are flowing to the big utilities because they’re part of the Ohio Valley Electric Corporation. It was founded in 1952 as a way to provide power to the U.S. Atomic Energy Commission’s uranium-enrichment facility near Piketon.
The federal government terminated its agreement to buy power from the consortium in 2003. But in 2011, as natural gas was becoming a cheaper energy source for electricity than coal, the members of the consortium signed an agreement to keep operating the coal plants and putting power on the grid through 2040.
For their part, spokesmen for AEP and Duke said the coal subsidy that was part of HB 6 replaced an earlier “hedging mechanism” that had been in place.
“The changes to this approved mechanism resulting from House Bill 6 were initiated by the Ohio Legislature for the benefit of customers, and should remain in place,” Duke spokesman Lee J. Freedman said in an email.
AEP spokesman Scott Blake said the HB 6 subsidies are paying down debt and none of that money is going to shareholders.
The Ohio Valley Electric Corporation “provides critical generation resources for Ohio customers and ensuring that it remains available for our customers has long been a priority for AEP Ohio. The provision in HB 6 merely continues the established cost recovery for OVEC in retail rates,” Blake said in an email.
Weston, the consumers’ counsel, isn’t buying it.
“That subsidy is preventing the competitive market from benefiting Ohioans with lower electric bills and a cleaner planet,” he told the Senate committee.
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