The Public Utilities Commission of Ohio is preparing to consider formal comments on the findings of independent audits of extra customer charges collected in 2020 by three utilities buying electricity from Ohio Valley Electric Corp.’s (OVEC) coal-fired power plants, often at above-market prices.

The action by the PUCO to accept formal comments on the performance audits came two days after the Sierra Club, the Ohio Environmental Council and other groups publicly demanded action by the regulator.

2019’s Ohio Clean Air Act, better known as HB 6, added surcharges to ratepayer bills to subsidize the OVEC plants. The provision was added to the controversial bill, aimed primarily at subsidizing FirstEnergy’s (NYSE:FE) nuclear plants in the state, to ensure its passage.

When former Ohio House Speaker Larry Householder (R) was indicted on federal racketeering conspiracy charges in connection with the bill, state lawmakers in 2021 revoked the nuclear subsidy but rejected several bills seeking to eliminate the OVEC subsidy, known as the “legacy generation rider.”

AEP Ohio (NASDAQ:AEP), AES Ohio (formerly Dayton Power & Light) (NYSE:AES) and Duke Energy Ohio (NYSE:DUK) are the largest investor-owned companies that jointly own OVEC and have contracted to buy a percentage of the power generated by its two 1,000-MW plants at whatever it cost to produce. The plants were designed and built in the early 1950s. OVEC offers most of their power into the PJM market.

The agreement between OVEC and the three utilities is also designed to work in reverse, producing customer credits if OVEC’s costs were less than market prices. That happened in 2022 when the companies added modest credits to customer bills, reflecting the lower price of coal compared with natural gas during the period.

The surcharge raised total customer bills in the state by $114.7 million in 2020 and $72 million in 2021 but reduced the total amount paid by customers of the three utilities by $28.5 million in 2022, according to PUCO figures obtained by RTO Insider.

The performance audits were done for the PUCO by Boston-based London Economics International. The company audited each company’s monthly OVEC-connected charges from Jan. 1 to Dec. 31, 2020. The audits have been available in a PUCO docket, but the agency has only now called for comments, which are due May 5.

The performance audits found that “overall … the processes, procedures and oversight were mostly adequate and consistent with good utility practice.” They also found that one component of fixed costs that each of the three utilities listed appeared to be similar to a “return on investment,” something not permitted by a company operating in a deregulated market.

Following the March 9 conviction of Householder and a former state Republican Party chairman, two Democratic state representatives introduced a new bill to eliminate the OVEC charge and require the utilities to reimburse customers for past collections. The bill is in committee, but no hearings have been set. (See Householder Convicted in FirstEnergy Bribery Case.)

“Initially the subsidy was imposed by the PUCO. And now the subsidy is a state law courtesy of the infamous House Bill 6 and utility lobbying,” said J.P. Blackwood, spokesman for the Ohio Consumers’ Counsel. “Consumers should not be forced to pay AEP, Duke and AES for this corporate welfare. Ohio is supposed to be a deregulated state for power plants, meaning there should be no subsidies at consumer expense for these AEP/Duke/AES coal power plants.”

The Ohio Manufacturers’ Association noted in a study released on March 24 that customers have already paid nearly $400 million to the three utilities for their ownership in OVEC and can expect to pay a total of $850 million by 2030 unless HB 6 is revoked in its entirety.