A proposal from FirstEnergy would guarantee income for the Davis-Besse nuclear plant and other facilities. (Photo by AlienCG via Creative Commons)
As FirstEnergy awaits a decision on its proposed electric security plan after a similar proposal from American Electric Power (AEP) was rejected by regulators last month, broader themes about Ohio’s energy future are emerging in the debate.
The plan recommended by FirstEnergy would have Ohio electricity consumers pay for operating costs of what critics deem two inefficient power plants; the Davis-Besse nuclear plant near Toledo and the W.H. Sammis coal-fired plant FirstEnergy operates on the Ohio River. An evidentiary hearing on the FirstEnergy proposal is scheduled to be held at the Public Utilities Commission of Ohio (PUCO) offices on April 13.
The PUCO ruled last month that AEP’s similar proposal failed to promote rate stability or overwhelmingly prove that it was in the public interest. Opponents of FirstEnergy’s plan, who have characterized the proposals as “bailouts,” believe it should meet a similar fate.
(Photo by Michael Kappel via Creative Commons)
Two months after his inauguration, Illinois Gov. Bruce Rauner has made national headlines for his aggressive efforts to get the state’s budget crisis under control.
Energy and related environment issues have so far taken a back seat, but experts and advocates are watching closely for signs of what the new Republican gubernatorial administration will mean on that front.
Rauner’s draft budget released in February raised serious concerns that money for state energy efficiency and renewable energy projects will be cut and swept into the state’s general fund, as Midwest Energy News reported.
Rauner’s transition report released in January expressed support for a diverse energy mix including renewables, natural gas from hydraulic fracturing (fracking), nuclear and also “clean” coal. It specifically pledged support for energy efficiency, though the draft budget has cast doubts on that commitment.
Critics are raising conflict-of-interest questions about a report warning about reliability risks from the U.S. Environmental Protection Agency’s proposed Clean Power Plan.
The November 2014 report from the North American Electric Reliability Corporation (NERC) claims that putting the EPA’s plan into action could cause instability in the nation’s electric grid, increasing the risks for blackouts.
Officials in Ohio and Indiana, along with coal industry groups, have cited the NERC report in voicing opposition to the Clean Power Plan.
Now the Energy and Policy Institute has alleged there were potential conflicts of interest for Energy Ventures Analysis (EVA), a consultant with ties to a coal technology company that worked on the NERC report.
Cathy Kunkel is an IEEFA fellow.
Cross posted from the Institute for Energy Economics and Financial Analysis
By Cathy Kunkel
FirstEnergy’s most recent quarterly numbers and its outlook for 2015 are both dismal and in line with a report we published last fall, “FirstEnergy Seeks a Subsidized Turnaround.”
If anything, FirstEnergy’s problems have only gotten worse since we issued our report:
- FirstEnergy’s net income (revenues less expenses) continues to decline. Here’s the spiral: From $869 million in 2011 to $392 million in 2013 to $299 million in 2014.
- Its earnings per share fell to its lowest point in a decade. Earnings per share in 2014 were $0.51, down from $0.90 in 2013.
- Its long-term debt, already among the highest in the utility industry, increased from $15.8 billion in 2013 to $19.2 billion in 2014, and on its fourth-quarter earnings call, the company’s chief financial officer conceded that the parent holding company is carrying more debt than “we are comfortable with.”
While Ohio regulators last week rejected one utility’s plan to guarantee income for its power plants – characterized by critics as a “bailout” – the decision left the door open for similar proposals in the future.
Meanwhile, protective orders will continue to prevent public disclosure of all the facts and figures behind the plans proposed by utilities.
Last Wednesday the Public Utilities Commission of Ohio (PUCO) rejected a proposal by American Electric Power (AEP) that would have guaranteed sales for AEP’s share of all electricity from two coal plants owned by the Ohio Valley Electric Corporation. All ratepayers would have had to cover the costs of that plan, whether they chose AEP for their electricity generation company or not.
AEP claimed the plan would give ratepayers a hedge against long-term inflation. It described its plan as a Power Purchase Agreement (PPA).
Environmental and consumer advocates have said the plans would impose huge immediate costs on ratepayers with the likelihood of large long-term net losses as well.
The Walter C. Beckjord power plant in Ohio is one of many that have shut down rather than meet pollution rules. (Photo by Brett Ciccotelli via Creative Commons)
A case currently before the Supreme Court could decide whether coal-fired power plants can escape federal rules for mercury and other hazardous air emissions. The case has important consequences for Ohio and other parts of the Midwest.
On the one hand, utilities and other challengers argue that the U.S. Environmental Protection Agency unreasonably failed to consider costs in determining whether the regulations are appropriate.
On the other hand, the U.S. Environmental Protection Agency says the new rules can save tens of billions of dollars in human health costs each year.
Advocates say those amounts and other costs shifted to society are essentially a subsidy for coal-powered electricity.
Transmission lines near Canton, Michigan. (Photo by Fred Locklear via Creative Commons)
Michigan’s Lower Peninsula faces a 3 GW electric capacity shortfall next year. But energy experts say that doesn’t mean the state needs to rush into building 3 GW worth of new generation.
Doing so, some argue, could actually put Michigan in an even worse position in the future.
The capacity shortfall — which is projected by the Midcontinent Independent System Operator (MISO) to grow as coal plants are retired to meet federal emission rules — may also present opportunities for the state to restructure its energy system to encourage demand-side solutions, driving down the need for new generation.
While details about energy supply and demand may sound esoteric to average ratepayers, the issue is on the radar of lawmakers in Lansing this year. State officials say that reliability concerns in the Upper Peninsula due to uncertainty over an aging coal plant serve as a warning to the rest of the state about how average ratepayers could be impacted without proper planning for the future.
Editor’s note: This story was updated to include comments from MISO and Gov. Rick Snyder.
Wisconsin-based utility We Energies and its major mining company customer in the Upper Peninsula reached an agreement today that effectively ends the need for ratepayer subsidies to keep an aging coal plant open in Marquette.
Cliffs Natural Resources announced today that it will stay on as a We Energies customer until the Presque Isle Power Plant is sold, allaying the utility’s concern that Cliffs would leave for an alternative energy supplier before that happened.
Out of that concern, We Energies said it needed to keep collecting System Support Resource payments to keep Presque Isle open, despite claims last week by top Michigan officials that We Energies was “double dipping” by doing so.
We Energies says it has made an offer to one of its large industrial customers in the Upper Peninsula that, if agreed to, would end the latest dispute over ratepayer subsidies keeping the utility’s aging coal plant open in Marquette.
The most recent dispute over System Support Resource (SSR) payments keeping the Presque Isle Power Plant open surfaced when Cliffs Natural Resources — which left We Energies for an alternative energy supplier in 2013 because of steadily increasing rates — returned to We Energies as a customer on Feb. 1.
However, the utility has continued to collect SSR payments in escrow out of fear that Cliffs would leave for a different supplier again.
©2015 E&E Publishing, LLC
Republished with permission
By Manuel Quiñones
Numerous industry and environmental interests are weighing in on high-profile federal litigation over the legality of what is widely known as Minnesota’s anti-coal law.
Last year, a federal judge said the Next Generation Energy Act ran afoul of the U.S. Constitution’s Commerce Clause — which gives the federal government power to regulate interstate commerce — by restricting the purchase of carbon-intensive energy from other states.
Neighboring North Dakota, which mines coal and is reliant on the fuel for power generation, sued Minnesota in 2011 over the law. It said Minnesota’s law would, in effect, regulate its own generating portfolio (Greenwire, April 21, 2014).