By Christen Smith

A plan pending before the Ohio Senate could divert $300 million in ratepayer funds away from renewable resources to subsidize nuclear and fossil fuel plants, effectively gutting the state’s renewable portfolio standard.

The state House of Representatives on Wednesday voted 53-43 to pass House Bill 6, which  would create the Ohio Clean Air Program. The legislation — supported by a monthly fee added to utility bills that would range from $1 for residential customers up to $2,500 for large-scale users consuming more than 45 million kWh per year — would replace existing charges for helping the state meet its standards for renewable generation, energy efficiency and peak demand reduction.

“The good news for electric customers is that for many, their bills will actually go down,” said Rep. Jamie Callender (R), chair of the House Public Utilities Committee and co-sponsor of the bill. “This is because there are already charges on their bills in the form of a renewal portfolio standard and energy efficiency standard/peak demand. The new program seeks to offer an alternative way to encourage cleaner energy production in Ohio.”

Electric companies currently assess a monthly $4.10 fee on customers related to green energy policies. The Ohio Environmental Council Action Fund says about 74 cents supports distributors meeting renewable resource standards and the remaining $3.36 is used for prioritizing energy efficiency and peak demand reduction.

HB 6 instead mandates residential customers pay $1/month, starting in 2021, for FirstEnergy Solutions’ Davis-Besse and Perry nuclear plants. The fee grows depending upon the ratepayers’ classification, with all revenues collected by the state treasury and distributed back to the defined “clean air resources” at a rate of $9/credit for every megawatt-hour of energy produced. Solar and wind generators are ineligible for the credit.

FirstEnergy said PJM’s existing market structure values cheaper, polluting fossil fuels over the reliable, carbon-free — and costly — generation from nuclear reactors. The plan levels the playing field, FirstEnergy said, given renewable resources like wind and solar already receive federal out-of-market subsidies.

“Wind can tail off during extreme cold temperatures, while solar is already offline in the evening or early morning hours,” said Dave Griffing, vice president of government affairs for FirstEnergy. “Nuclear power, by contrast, is remarkably reliable and typically picks up the slack as other generators struggle.”

The nuclear plants provide a combined 2,100 MW of capacity, enough to power 2 million homes, Griffing said. Without state intervention, the bankrupt company will retire both reactors over the next two years, taking $30 million in state and local tax revenue with it.

“Carbon and other harmful emissions will increase,” he said. “Grid resilience will deteriorate. And costs to consumers will go up.” The Union of Concerned Scientists said the bill will raise more than $170 million in ratepayer fees for the failing plants.

On top of the nuclear subsidy fee, which sunsets in 2026, electricity companies can recoup costs lost on long-term contracts to meet Ohio’s RPS mandates until 2030. American Electric Power, the Columbus-based utility that owns more than 40% of the state’s coal and natural gas plants, urged lawmakers to consider these existing contracts when moving the bill forward.

‘Total Flip-flop’

Supporters of the state’s RPS have unsurprisingly urged lawmakers to reject the bill.

“Ohio should not go down the path of effectively repealing this important policy and certainly not under the narrative it will provide cleaner air and better public health,” said Andrew Gohn, eastern region director of state affairs for the American Wind Energy Association, who noted funding from the state’s alternative energy mandates supports 2,200 MW of energy from wind farms.

The PJM Power Providers Group defended the RTO’s competitive markets for spurring renewable generation development and reducing carbon emissions 15% between 2013 and 2017. Sulfur dioxide and nitrogen oxide levels declined 65% and 31%, respectively, it said.

“This progress was not made because Ohio selected certain resources that it wanted to subsidize,” said Glen Thomas, the group’s president, “but rather through the setting of environmental goals and allowing the market, and consumers empowered with choice, to select which resources are best equipped to meet those goals.”

Ohio’s House Democrats sided with industry critics of the bill, instead proposing their own Clean Energy Jobs Act to preserve the state’s environmental goals. The caucus also criticized Republicans for using the bill to codify a state Supreme Court ruling that would allow the Ohio Valley Electric Corp. to charge customers up to $2.50/month to subsidize two of its coal plants — including one in Indiana.

“HB 6 is a total flip-flop that started by calling itself a clean air bill and evolved to be a corporate welfare bill that bails out a failing Indiana coal plant,” Assistant Minority Leader Kristin Boggs (D) said.

“It’s a bad deal that kills jobs, subsidizes failing out-of-state corporations and takes us backward,” Rep. David Leland (D) said. “We owe it to taxpayers to live up to our promise that we work for them. Our Ohio Clean Energy Jobs Act invests in a framework for the future that protects existing jobs, grows new ones and moves Ohio forward toward a clean energy economy.”

The bill, however, passed the House with support from 10 Democrats, while 17 Republicans voted against it. Republicans hold a comfortable 24-9 majority in the Senate, but it’s unclear how many support HB 6 in its current form. RTO Insider questioned Senate Majority Leader Matt Huffman about his caucus’ support for the bill and how quickly — if it all — it will be considered for a vote. He did not return requests for comment.

Republican Gov. Mike DeWine applauded House leadership for moving the bill quickly, in spite of the issue’s “difficult” and divisive nature, but didn’t commit to signing it should it cross his desk.

“As I have previously stated, Ohio needs to maintain carbon-free nuclear energy generation as part of our energy portfolio,” he said Wednesday. “In addition, these energy jobs are vital to Ohio’s economy. I look forward to this legislative discussion continuing in the Ohio Senate.”