House lawmakers review coal bailouts, energy efficiency proposal

By: - November 1, 2021 12:50 am

A field of coal is seen near the Gavin Power Plant on September 11, 2019 in Cheshire, Ohio. (Photo by Stephanie Keith/Getty Images)

Major pieces of scandal-tainted legislation remain on the books in Ohio, and House lawmakers indicate they plan to keep it that way.

The Ohio House Public Utilities Committee on Wednesday reviewed two pieces of legislation aimed at different remnants of House Bill 6 from 2019.

HB 6 is now mired in a bribery scandal that has yielded several pleas of guilt and criminally implicated the former House speaker, who awaits trial. When FirstEnergy Corp. admitted to its role paying millions into a dark money fund to get HB 6 passed, the company stated it also bribed the chairman of the Public Utilities Commission of Ohio, the state’s top regulator. He has not been charged with a crime.

Rep. James Hoops, R-Napoleon. Official photo.

One bill before the committee Wednesday would revive, in watered down form, a version of an energy efficiency program designed to reduce Ohio ratepayers’ electricity use by 0.5% annually. HB 6 eliminated a more ambitious program that aimed to reduce consumer electricity use by 2% annually.

The other would repeal hundreds of millions of dollars in ratepayer-funded subsidies of two unprofitable coal-fired power plants operated by the Ohio Valley Electric Corp., a cooperative owned by several large utilities. HB 6 took preexisting OVEC subsidies approved by the PUCO and codified them, extended their effective length by several years, and applied them to customers of all Ohio utilities (not just those that own OVEC).

After Wednesday’s hearing, Committee Chairman Jim Hoops. R-Napolean, said the energy efficiency plan — backed by utilities, environmentalists and bipartisan lawmakers — is “moving along.” House Speaker Bob Cupp, R-Lima, however, said last month there’s insufficient GOP support to repeal the coal bailouts.

Coal bailouts

Executives representing the utilities that own OVEC — American Electric Power (43% equity), Duke Energy (9%), and AES (5%) — all made the case Wednesday that now is not the time to remove the subsidies.

In fact, Duke Energy executive Amy Spiller rejected use of the term “subsidies.” She insisted that Duke’s relationship with OVEC is “independent” of the “hedging mechanism” enabled in House Bill 6 it uses to charge customers for costs incurred via its OVEC interest.

Utility officials refer to the OVEC payments as a “hedge” — they’re a charge to customers when OVEC sells power at a loss, but could theoretically become a credit to consumers if coal markets boom in value. However, since HB 6 was enacted, the “hedge,” in effect until 2030, has cost ratepayers $166 million and has yet to act as a credit, according to data from PUCO.

Utility officials insisted that rising natural gas prices and a looming cold winter will soon turn the debt into a credit — unless lawmakers repeal the subsidies.

“Now would be the worst time to undo the hedge,” said Marc Reitter, President and COO of AEP Ohio.

Spiller referred to the consumer charges as “beneficial, practical solutions that have broad based support” acting as a hedge against volatile markets.

She said surrounding criminal and political bribery scandals around HB 6, mostly related to a bailout to two nuclear plants and other favorable provisions to FirstEnergy, shouldn’t poison the whole bill.

“That there is conversation and allegation related to other aspects of House Bill 6 shouldn’t dilute the value we see today,” she said.

Neil Waggoner, a spokesman for the Sierra Club, said the plants are “boondoggles” that continue to hemorrhage money. Lawmakers, he said, seem apathetic to a status quo that leaves consumers on the hook for OVEC’s losses.

“These folks in the legislature, they just want to bury their heads in the sand and not deal with it,” he said.

Emails recently surfaced showing PUCO staff last year directing an auditor to remove a line from a then-private audit draft that explicitly found that keeping the OVEC plants running “does not seem to be in the best interests of the ratepayers.”

The Ohio Consumers’ Counsel, which found the emails, described them as an example of the cozy relationship between Ohio utilities and state regulators.  The utility officials defended the edits Wednesday, comparing it to catching and fixing your CPA’s error on a tax filing.

State Rep. Jeffrey Crossman, D-Parma. Official photo.

Rep. Jeff Crossman, D-Parma, called the hearing an “exercise in frustration,” as utilities quibbled over what qualifies as a “subsidy” and avoided any direct answer on whether the subsidies are needed to keep the plants open.

“If you’re not getting subsidies from House Bill 6, then why are you there opposing the bill?” he said in an interview.

In an interview after the hearing, Hoops, the committee chairman, indicated support for keeping the bailouts in law. However, he seemed to confuse “hedge funds,” the financial investment vehicle, with the utilities referring to a “hedge” against market trends.

“You have the hedge funds, which was brought up today, where it could create other issues if they got out of it,” he said.

When asked why the state should subsidize failing coal plants that emit huge plumes of greenhouse gasses in the air, he generally avoided the question.

“It’s how you look at it,” he said. “We want to make sure that there’s reliable and affordable energy out there for everybody. I don’t want to see an instance where people don’t have energy.”

Energy efficiency

The committee also fielded more testimony on legislation to replace some of a program designed to incentivize utilities to boost the energy efficiency of their customers’ homes — a program HB 6 gutted.

House Bill 389 would allow utility companies to charge customers $1.50 per month (customers can opt out) and spend the money improving the energy efficiency of their customers’ houses. The idea is that utilities’ financial losses due to improved energy efficiency would be offset by the customer charges.

The efficiency programs can offer rebates on things like smart thermostats that more efficiently mete out power to heat homes, or more efficient appliances and light bulbs.

Environmental groups like the Sierra Club and Environmental Law and Policy Center, along with utility companies, support the idea. Rob Kelter, an attorney with the ELPC, said there’s less money in this newer program than its pre-HB 6 predecessor, but it has been “tightened up” in terms of what costs utilities can include.

“I would anticipate that it’s going to be a little lower because we’re spending a lot less than we were before … but I believe the per dollar spent savings will be higher,” he said to lawmakers.

In an interview, Kelter emphasized the value efficiency programs bring to all customers. The reduced collective demand, he said, drives down energy prices for everyone, especially during peak energy use periods like hot August days.

“There are customer savings from getting a lower market price,” he said. “They save long term because utilities need to make less investment in the grid.”

However, the Ohio Consumers’ Counsel, which represents residential ratepayers, objected in a previous hearing. Jeff Jacobson, representing OCC, argued the legislation gives consumers’ insufficient opportunity to opt out of the program and granted utilities too much wiggle room to surpass the purported maximum $1.50 charge to customers.

Lawmakers adopted amendments Wednesday that expand ratepayers’ ability to adopt out and tightening the language around the $1.50 monthly cap.

“Relatively little of what we proposed for consumer protection has been included in the new version of House Bill 389,” said OCC spokeswoman Merrilee Embs. “Energy efficiency is a good thing. But the competitive market is a much better source than monopoly utilities for Ohioans’ energy efficiency needs. Also, the bill’s advertised cap on utility charges has loopholes, which will lead to charges above the cap.  And the opportunity for consumers to opt out of the program is too limited.”

Hoops didn’t offer any timeline for a vote on the legislation.



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Jake Zuckerman
Jake Zuckerman

Jake Zuckerman is a statehouse reporter. He spent three years chronicling the West Virginia Legislature for The Charleston Gazette-Mail after covering cops and courts for The Northern Virginia Daily.