Fallout still spreads from infamous House Bill 6 | Michael Douglas

Five years ago, state lawmakers enacted the infamous House Bill 6, and the fallout still spreads.

Most notably, the convictions of Larry Householder, a former House speaker, and others on federal corruption charges have been followed by the indictments of three other leading players on related state offenses. The trio amounts to no less than a former FirstEnergy chief executive, the company’s former lobbying chief and a former chairman of the Public Utilities Commission of Ohio.

Lawmakers did repeal the element that stirred the most controversy at the time, requiring ratepayers to subsidize the operation of two nuclear power plants. Worth adding is this subsidy at least carried an aspect of good intentions.

Those plants, along with others across the country, are crucial to addressing climate change at the pace advised by scientists. They are clean energy, essentially, and needed to advance the necessary transition from fossil fuels.

Other provisions of House Bill 6 were carelessly shortsighted. For instance, the legislation ended both energy efficiency programs and the state’s renewable energy benchmarks. Yet, arguably, an even more misguided step was extending subsidies for two aging coal-fired power plants, one in Gallia County, near the West Virginia border, and the other in Indiana.

The monthly charge to customers for the coal-fired plants, $1.50, actually exceeded the charge for the nuclear plants, 85 cents.

Now, the PUCO has a chance to correct this policy error, short of lawmakers doing so.

Critics of the subsidy, including the Citizens Utility Board of Ohio and the Union of Concerned Scientists, have taken their case to the commission, the final reply briefs filed last week. Their argument appears strong: The subsidy fails the test of prudence and reasonableness.

The two power plants date to the 1950s. They are owned by a consortium of utilities, called the Ohio Valley Electric Corp. Today, the group includes AEP Ohio, Duke Energy and AES Ohio. For years, the plants met the electricity needs of the uranium enrichment operation in Piketon. Two decades ago, the federal government canceled its contract with OVEC, and the plants began selling power to the wholesale market.

That went well enough — until the boom in natural gas.

Around 2010, OVEC and its shareholders faced the challenge shared by other utilities: Their coal-fired plants no longer could compete with the abundant and cheap natural gas-fired alternative. This hard reality contributed heavily to the steady, and continuing, closures of coal-fired plants.

Why do the OVEC plants still operate? The PUCO came to the rescue. The commission allowed OVEC to charge customers a monthly fee to help with the plant expenses. The arrangement was packaged as a hedge. Customers would receive a refund if revenues exceeded costs.

The trouble is that costs routinely have outpaced revenues. A PUCO member once worried presciently about an “illusory insurance policy.”

As a result, ratepayers have paid and paid. They have done so, as critics point out, though less expensive alternative sources have been available, including solar and wind.

Critics note an analysis, looking at 2012 to 2019, that found the OVEC plants experienced an accumulated shortfall of more than $1 billion — Ohio ratepayers picking up an estimated $159 million of the tab.

This was the pattern when lawmakers considered House Bill 6. Yet they chose to extend the subsidy to 2030. What happened? An analysis by the Citizens Utility Board and the Union of Concerned Scientists found that in 2020, the first year under the House Bill 6 subsidy and the focus of the PUCO proceeding, OVEC incurred $118 million in above-market costs.

Consider that the Michigan Public Service Commission examined this matter last year. It concluded that Indiana-Michigan Power, an AEP affiliate and OVEC member, experienced about $1.3 million in excess 2020 costs because it went with coal rather than less-expensive alternatives. Put another way, the Michigan commission found the utility acted imprudently and unreasonably. It explained why OVEC shareholders, not ratepayers, must cover the costs.

The PUCO would do well to reach the same conclusion, and not just because of the unnecessary burden on ratepayers, which the Ohio Consumers Counsel projects at $700 million by 2030.

In the recent Global Tipping Points report, scientists cited increasing evidence of nearing dangerous thresholds as carbon pollution heats the planet. They point to such things as the collapse of big ice sheets, the thawing of permafrost and the death of coral reefs. Such change puts at risk how the planet works.

No doubt, the shift from fossil fuels requires a careful transition. They cannot, in all practicality, be abandoned suddenly. Yet when the opportunity arises, it is crucial to press forward. Without the current subsidy, the OVEC plants wouldn’t survive. This chapter of House Bill 6 isn’t environmentally or financially sound.

Michael Douglas was the Beacon Journal editorial page editor from 1999 to 2019. He can be reached at mddouglasmm@gmail.com.

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This article originally appeared on Akron Beacon Journal: Fallout still spreads from infamous House Bill 6. Will PUCO act?