Ohio Enacts Controversial Bill to Subsidize Nuclear, Coal, and Slash Renewable Standard
Credit to Author: Sonal Patel| Date: Tue, 23 Jul 2019 19:42:29 +0000
Ohio’s Gov. Mike DeWine (R) on July 23 quickly signed a controversial nuclear subsidy bill that narrowly passed the state’s House of Representatives on Tuesday, making Ohio the fifth state in the nation to prop up nuclear power.
Lawmakers passed H.B. 6 with a 51–38 vote Tuesday. The bill passed the state Senate on July 17, sparking a week of debate prior to the House passage, which was uncertain after House Speaker Larry Householder expressed concerns the measure wouldn’t have enough support in his chamber. The bill has faced fierce opposition by a wide array of groups, including advocates for renewables and clean energy, the natural gas industry, and competitive generators.
The law essentially provides FirstEnergy Solution’s (FES’s) Davis-Besse and Perry nuclear power plants with an estimated $150 million a year during the 2021 to 2027 period to keep the reactors in service. It also provides about $60 million a year through 2030 to keep two Ohio Valley Electric Corp. (OVEC) coal plants—one in Ohio and another in Indiana—in operation.
Meanwhile, the law also slashes the state’s 12.5% renewable energy standard to 8.5%, and it will phase out the state’s energy efficiency standard. As the American Council on Renewable Energy (ACORE) noted in a July 18 letter to Gov. DeWine, renewable energy groups are specifically opposed to a township referendum process that they said would discriminate against wind development.
“House Bill 6 is another significant setback for Ohio’s clean energy market, on top of restrictive zoning provisions on wind turbines that were inserted at the last minute into the 2014 Ohio budget legislation,” explained the American Wind Energy Association (AWEA) in a statement on Tuesday. “Among the most restrictive in the nation, Ohio’s wind farm setback restrictions have impeded wind energy development for the last five years. As a result, Ohio has fallen behind its neighbors, losing out on billions of dollars in private investment and well-paying blue-collar jobs.”
The bill’s passage, predictably, was lauded by the Nuclear Energy Institute (NEI), a nuclear trade group that has advocated for similar bailouts in New York, Illinois, Connecticut, and New Jersey. ““The majority of Ohio’s clean energy will remain in operation thanks to legislation passed by the legislature. Ohio’s nuclear power plants do more than churn out 90 percent of the Buckeye state’s clean power, they support 4,300 jobs and contribute $30 million per year to roads, school and public services. Keeping Ohio’s carbon-free nuclear plants operating is a smart investment to ensuring access to 24/7 clean, reliable power as well as low electricity prices,” said Maria Korsnick, NEI’s president and CEO.
FES, which did not immediately respond to a request for comment, had previously said it would work with the state to avoid closure of Davis-Besse—even though it has chosen to deactivate the plant. Progress on that front continues: at an annual public meeting at the plant on July 19, the Nuclear Regulatory Commission (NRC) even outlined what the decommissioning process will look like.
Both the Davis-Besse and Perry plants, which operate in competitive markets, have posed economic headaches for FES, which is expected to emerge from bankruptcy as a company that will be distinct from its parent, FirstEnergy Corp., a company that has been dogged in its effort to become a fully regulated company.
When FES sought bankruptcy protection in March 2018, it had been financially crippled by market volatility. Among its first measures was to announce the closure of four nuclear units worth 4 GW: the 908-MW Davis-Besse Nuclear Power Station in Oak Harbor, Ohio, by 2020; the 1,268-MW Perry Nuclear Power Plant in Perry, Ohio, in 2021; and the twin-unit 1,872-MW Beaver Valley Power Station in Shippingport, Pennsylvania, in 2021. But as it did so, FES also took the unprecedented—and highly controversial—step of entreating the Department of Energy (DOE) to save its beleaguered coal and nuclear plants through a Federal Power Act Section 202c emergency order. As court filings show, FES also worked “to develop and implement outreach to legislative and regulatory officials” in Ohio and Pennsylvania to explore their support for continued operation of FES’s nuclear power plants.”
When the Ohio nuclear subsidies bill finally began progressing through the legislature in May, kicked off by a House passage of a different version of the bill, FES repeatedly warned lawmakers that it needed the measure approved by June 30 because that was when it had to decide whether to order $52 million worth of nuclear fuel for Davis-Besse.
Even with the new law, FES is unlikely to see any state support until 2021, and it is unclear if the timeline is acceptable to the company.
—Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine)
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