Ohio's New Law Prohibits Settlements that Close Base Load Power Plants

Strategic Insights -

A decade-long regulatory standoff between environmental groups and American Electric Power (AEP) over six coal-fired power plants in Ohio has come to a head with the passage of House Bill 15, signed by Republican Governor Mike DeWine in May. The law prohibits settlements that involve the closure of "base load" power plants, which run primarily on nonrenewable fuels such as natural gas or nuclear, but excludes wind or solar power, even when combined with battery storage. This new law reflects a desire to protect fossil fuels and nuclear, despite their relatively high costs compared to cleaner sources of power.

Key Takeaways:

  • The Ohio law prohibits settlements that involve the closure of "base load" power plants, which run primarily on nonrenewable fuels such as natural gas or nuclear.
  • The definition of "base load" electric generating facilities excludes wind or solar power, even when combined with battery storage.
  • Industry groups or companies have previously received discounts and other benefits in return for dropping opposition to utilities' added charges.
  • The same year that the Sierra Club reached a settlement with AEP, a trade group representing industrial customers negotiated a special rate with FirstEnergy's Ohio utilities in exchange for dropping opposition to a customer-funded bailout of that company's unprofitable coal and nuclear plants.
  • HB 15 will still allow settlements with special deals, as long as terms are part of the public record, there's no cash payment, and they do not close or limit "base load" electricity-generating facilities.
  • Neil Waggoner, who heads the Sierra Club's Beyond Coal campaign for the Midwest region, suspects the provision is likely a backlash to the environmental group's 2015 settlement with AEP.
  • The "base load" provisions weren't part of HB 15 as it originally passed the House, but were added to the language in a substitute version of SB 2 submitted by Ed Spiker, chair of the Ohio Coal Association.
  • The law reflects a desire to protect fossil fuels and nuclear, despite their relatively high costs compared to cleaner sources of power.
  • HB 15 also finally revokes subsidies for two 1950s-era coal plants, which had been put in place by HB 6, the 2019 law at the heart of an ongoing public corruption scandal in Ohio.
  • Critics of the law question its constitutionality, worrying that it could limit the ability to retire old, unprofitable power plants.
  • Environmental groups have criticized laws that include natural gas and nuclear power in the state's definition of "green energy," claiming that this is a way to frame the argument against renewable energy.

Statistics:

  • The Ohio law prohibits settlements that involve the closure of "base load" power plants, which run primarily on nonrenewable fuels such as natural gas or nuclear.
  • The definition of "base load" electric generating facilities excludes wind or solar power, even when combined with battery storage.
  • The Sierra Club's 2015 settlement with AEP did not end up delivering all of the expected clean energy benefits.
  • State rules requiring wind turbines to be a certain distance from other properties ultimately made it impossible for AEP to add the planned 500 megawatts of wind generation.
  • The Public Utilities Commission of Ohio refused to allow the utility to charge customers the cost of building 400 MW of solar energy.

Sources:

  • (https://www.canarymedia.com/articles/utilities/ohio-hb15-settlements-clean-energy)
  • (https://www.legislature.ohio.gov/legislation/136/hb15)
  • (https://www.canarymedia.com/articles/enn/what-can-ohio-regulators-do-to-prevent-future-utility-corruption-scandals)
  • (https://www.canarymedia.com/articles/enn/firstenergy-bailout-case-adds-new-special-deal)
  • (https://www.canarymedia.com/articles/enn/firstenergy-bailout-case-adds-new-special-deal)