Despite strong opposition from the natural gas industry, environmental groups and others, the Republican-controlled Ohio legislature on Tuesday passed a bill to subsidize two nuclear power plants operated by bankrupt subsidiaries of FirstEnergy Corp.
Republican Gov. Mike DeWine wasted no time signing House Bill (HB) 6 into law, ending for now what FirstEnergy has been trying to accomplish for years. The bill also weakens the state’s renewables energy mandates, but it would subsidize solar projects being built across the state. In addition, the legislation provides financial assistance for Ohio Valley Electric Corp.’s two coal-fired plants in Ohio and Indiana.
For more than two years, the gas industry has waged a battle to stop the subsidies from passing, arguing that they would undermine the wholesale power markets by depressing energy prices and putting gas-fired generators and others at a competitive disadvantage. Abundant, low-cost gas supplies from the Appalachian Basin have made it difficult for nuclear and coal facilities to compete in the state and others, such as Connecticut, Illinois, New Jersey and New York, where similar legislation has been enacted to prop up faltering nuclear power plants.
Ohio-API Executive Director Chris Zeigler called the bill a “corporate bailout,” saying it would have unintended consequences for years to come. New Jersey-based LS Power warned last week that an expansion at its 700 MW dual-fuel simple-cycle Troy Generation Facility in Luckey, OH, would be cancelled if nuclear subsidies are enacted in the state. The expansion would add 500 MW of capacity at the facility, which burns both gas and fuel oil. That’s one of dozens of gas-fired projects that have been built or are under construction in the basin.
The Ohio Independent Power Producers, which represents gas-fired generators, said it warned legislators of such an outcome, adding that additional private investments would be driven away as a result of HB 6’s passage.
“There’s no telling how much additional investment our state will now miss out on because lawmakers decided to cater to corporations over constituents,” Zeigler said.
The House was called into session on Tuesday for a concurrence vote to pass the state Senate’s version of the bill, which cleared the chamber last week. HB 6 would provide $150 million to FirstEnergy Solutions Corp.’s Davis-Besse and Perry nuclear facilities for seven years beginning in 2021. It would also provide $20 million for solar facilities.
The funds would come through a monthly surcharge from 2021-2027 ranging from 85 cents for smaller residential customers to $2,400 for larger industrial customers. The bill would collect $50 million for the coal-fired plants through another ratepayer charge starting in January.
Ohio’s renewable portfolio standards and energy efficiency programs are also weakened by the bill. Previously, 12.5% of the state’s electricity by 2026 was required to come from renewable resources, but under HB 6 the requirement has been reduced to 8.5% by 2025 and would then be terminated. The legislation would also lower annual energy efficiency targets for utilities.
The Environmental Defense Fund’s Dick Munson, director of regulatory and legislative affairs, said the bill guts investments in alternative energy, undermining economic development in the process.
FirstEnergy Solutions and another subsidiary filed for bankruptcy last year, indicating at the time that prolific gas supplies had eroded power sale profits. Without subsidies, the company has said it would close both the nuclear plants by 2021. The bill’s proponents argued on behalf of the more than 1,000 people working at the nuclear plants and the zero-emissions, baseload power they provide.
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