Ohio power giants push back on energy overhaul bill

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To promote new power generation facilities, Ohio lawmakers are considering significant changes to the state’s energy system. Long-criticized coal plant subsidies and so-called electric security plans, which let utilities charge consumers for system upgrades and routine maintenance like pruning trees close to power lines, are eliminated in the Ohio House and Senate versions of the bills.

However, energy behemoths such as Duke Energy, AES Ohio, and AEP Ohio are resisting, arguing that electric security plans are essential to their balance sheets and safeguarding the outdated coal facilities.

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AES Ohio, formerly Dayton Power and Light, contended that state regulators must enhance the primary rate-making process if electric security initiatives are implemented. AES senior director Sharon Schroder clarified that rates are available in two varieties. In order to enable utilities to make timely, consistent investments in their distribution systems, the base rate looks backward at previous investments while electric security plans look forward.

According to Schroder, utilities should be able to account for multiple years’ worth of anticipated investments when submitting a rate case, with yearly audits to make sure the business has complied.

“It guarantees that we will be opening our books and truing-up to the actual every year, so it needs a proof review every year,” she said.

However, state senator Shane Wilkin, a Republican from Hillsboro, questioned what the bill’s 275-day cap on rate cases meant in comparison to a rate case each year.

Schroder contended that since businesses would only be showcasing one year’s plans rather than several, yearly cases would be less transparent.

Amy Spiller of Duke Energy made a similar case for multi-year rate plans, arguing that removing electric security plans would make it difficult to fund upgrades.

She contended that merely doing away with ESPs without coming up with a fresh solution would make an already difficult environment for investment even worse. Base rate cases are expensive. can can be appealed, and can take years to design, negotiate, settle, or litigate.

ESPs are a crucial instrument, according to AEP Ohio President and COO Marc Reitter, who also asserted that they are more responsive than the conventional rate-setting method.

“As a condition of recovery from consumers, riders demand that the utility justify every dollar spent in prudence audits each year,” he said. This contrasts with a base situation, in which the utility only supports one test year and the PUCO has minimal control of prudence in between cases.

Customers paid FirstEnergy $460 million, but the auditor isn’t sure if that money was used for bribes.

A 2022 Ohio Capital Journal article about FirstEnergy’s Distribution Modernization Rider was cited by state senator Kent Smith, a Democrat from Euclid. With that surcharge, the corporation made about half a billion dollars, but an audit for state regulators was unable to provide evidence of how the money was spent.

FirstEnergy provided testimony against the removal of ESPs even though the firm did not appear in person.

Wilkin repeatedly asked presenters to clarify the distinction between a multi-year proposal with yearly audits and annual rate cases. Nobody had a definitive response. After the hearing, Sen. Brian Chavez, R-Marietta, who chairs the committee, acknowledged the value of planning for a few years in the future, but he appeared perplexed by the company’s request.

He stated, “We’ll continue to speak with them because we don’t understand the differences between the bill as it stands and what they’re proposing.”

The utilities also took issue with clauses that eliminated subsidies for two coal facilities owned by Ohio Valley Electric Corporation (OVEC). One of the OVEC factories, located in Indiana, is over 70 years old. The co-op has a number of Ohio power firms as stakeholders.

As part of House Bill 6, the 2019 legislation at the heart of the biggest corruption case in Ohio history, state lawmakers approved fees to support the OVEC plants. Ohio consumers have already paid more than $439 million for such subsidies.

Because coal plants contribute to climate change, environmentalists oppose their continued support. Cathy Becker of Save Ohio Parks mentioned in her written testimony the connection between the rise in extreme weather and the use of fossil fuels.

Without a trace of sarcasm, however, Reitter maintained that the OVEC plants are necessary to prevent outages due to those weather occurrences.

According to him, this is particularly crucial during periods of extreme weather, which our state appears to be having regularly.

He went on to say that the arrangement will negatively impact AEP Ohio’s balance sheet if riders are not found to cover his company’s expenses.

In the meantime, Schroder contended that AES Ohio has made several unsuccessful attempts to sell off its ownership stake in OVEC.

Additionally, Spiller said that Duke Energy shouldn’t be held responsible for politicians’ reversals.

Through the statutory expiration date of December 31, 2030, Duke Energy Ohio has since taken business decisions that depend on the availability of the (OVEC subsidies), she added. Additionally, it would send a frightening message to the business community and impede economic development to abruptly abolish this section of state law—in fact, to remove any part of state law without offering a remedy or alternative—regardless of the enterprise involved.

Sen. Chavez could not say if he anticipated to put the measure to a vote, but he does anticipate another hearing on it next week.

Follow Xoron Bluesky, a reporter for the Ohio Capital Journal.

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