Generators that provide capacity to the largest U.S. power grid are going to get paid a lot more for guaranteeing electricity when the market needs it.
Cleared nuclear capacity fell by more than 7 GW from PJM’s last base residual auction, while demand response, renewables, gas and coal all saw their shares expand.
At this point it is old news, that the largest electric utilities in Ohio have been in discussions regarding “restructuring” competitive markets within the state. Despite their efforts to change the current seven-year construct, Ohio voters may be the biggest political snag in their way.
Based on a poll conducted in January and by Fallon Research and Communications, and first reported by The Cleveland Plain Dealer, Ohio voters are very much in opposition of a return to a regulated market construct that would allow monopoly utilities. The telephone survey was conducted in January polled a panel of 800 Ohio voters about key supporting issues. The results favoring energy choice and objection to monopoly utilities were consistent across party affiliation, gender, age, and location.
Results from Fallon Research’s Poll & The Plain Dealer’s Report:
More than 91 percent would oppose any law change allowing FirstEnergy or Columbus-based AEP to build new power plants and raise monthly rates to pay for them. AEP wants to do exactly that, build wind and solar farms and maybe new gas turbine plants while selling off or closing its old coal units.
Nearly 79 percent would oppose any legislation that did away with a customer’s choice to shop for power suppliers. Dozens of independent suppliers now compete for customers through a state-maintained “Energy Choice” website. A return to old-style regulation could end that kind of competition, say independent power companies, forcing customers to return to their traditional electric utilities for electricity as well as delivery.
Nearly 62 percent said they would oppose paying extra every month to support older power plants that cannot compete well against modern gas turbine plants. FirstEnergy has persuaded state regulators to do just that — though the latest subsidy does not mention its power plants. Federal regulators objected to earlier, more expensive proposals that spelled out exactly how the extra fees — amounting to an extra monthly consumer bill every year — would be spent.
Nearly 60 percent of voters would object to the creation of special subsidies for one fuel source — in this case FirstEnergy’s nuclear power plants, which are expensive to operate and do not always compete well against gas turbine plants. The idea has been adopted in New York and Illinois, but has been challenged as anti-competitive. FirstEnergy is considering asking for such a subsidy but has not made a final decision.
AARP and the Alliance for Energy Choice, a group representing independent power producers funded the statewide poll. The Alliance spokesperson, and former chairman of the PUCO, Todd Snitchler spoke on the results of the poll commenting that, “The results of the poll clearly demonstrate that talk about a need for re-regulation or changes to Ohio’s energy landscape, is pointed in the wrong direction.
Fallon Research and Communications. (2017). Ohio Voters on Energy Choice 2017. The Cleveland Plain Dealer [Distributor]. Retrieved from http://www.cleveland.com/business/index.ssf/2017/02/ohio_voters_want_energy_choice.html.
Does anyone remember “as sands through the hourglass, so are the Days of our Lives”? This is what it seems to be as the “Battle in the Buckeye State” has become with FirstEnergy and AEP Ohio and the approval of their respective rendering of the PPA’s. What had captured national attention from investors and regulators watching from the wings has now garnered the attention of the Feds. Specifically, the Federal Energy Regulatory Commission (FERC). The approval by our PUCO has now been put on hold by FERC for additional review and scrutiny for various reasons.
What seems to be at the heart of the issue is that both proposals put the consumers into a position that they are not able to mitigate or get out of having to pay (non-bypassable) charges that these PPA’s would have triggered.
To learn a little more:
For those of you who had money on the Final Four tournament, the Masters or the passage of the new ESP for FirstEnergy or the PPA filings in AEP, my guess is we all came up a little short. Not to mention what the impact will be going forward over the next 8 years. Only time will tell.
On March 31st, Ohio regulators approved the “income guarantees” for a number of AEP’s coal fired generation plants and FirstEnergy’s Davis Besse nuclear facility, a coal facility (Sammis) and their share of OVEC (Ohio Valley Electric Cooperative).
The PPA portions for both utilities, according to them, not only stabilizes rates, and provides job security but also guarantees their rate of return on their assets for the next 8 years. We will have a clear picture in 9 years! As a side note, DP&L is preparing their PPA proposal so those in that market area probably will not be left out!
Every rate payer within their respective service territories [AEP Ohio & FirstEnergy Ohio] will be affected, whether supply is taken from a supplier or directly from the utility. The charges (or credits) are unavoidable and non-bypassable on the distribution side of the bill meaning we all get to share equally.
Here are some links to the official PUCO comments:
For those energy nerds like us, or if you just can’t fall asleep:
www.PUCO.ohio.gov Case number: 14-1297-EL-SSO
www.PUCO.ohio.gov Case number: 14-1693-EL-RDR
FirstEnergy’s and AEP Ohio’s Power Purchase Agreements (PPA) are currently pending approval by the PUCO. If approved, it will guarantee the utilities a 10% rate of return (wouldn’t you like to earn a 10% Return on your money) and add unnecessary (in our humble opinion) charges to your electric bills that you can’t control.
Why should we bail out First Energy and AEP for their bad business decisions and insulate them from competition? The proposals force us, the consumer, to pay for their old, outdated and inefficient power plants.
To take a stand I encourage you and anyone with an electric bill to visit the FIGHT THE HIKES WEBSITE and voice your opposition of these PPA’s. Simply click on the “ACT Now” button to have your voice heard by the Governor, your state senator and representative, the commissioners and chairman of the PUCO.
The issue shouldn’t be about what’s best for utility companies and their shareholders, but what’s best for all Ohioans. It’s not about reliability. If you have any questions please contact me, Huck Hayes at 866-646-7322.
If you have missed all the happenings going on at the PUCO over the last few months, FirstEnergy’s PPA (Power Purchase Agreement) has been negotiated with and approved by the PUCO staff. As of this writing, the agreement is expected to be signed by the commissioners early in 2016 (and take effect starting June 1, 2016). The AEP filing approval is not far behind.
The FirstEnergy PPA was originally proposed as a 15-year arrangement as a means to keep viable some of the legacy generation assets (coal and nuclear) with a guaranteed rate of return. The Retail Rate Stability Rider (RRS) of the PPA returns First Energy Solutions generation facilities (Davis Besse, Sammis and their share of OVEC) to a “cost plus” regulation where they are guaranteed to cover the costs with a “reasonable” rate of return.
These plants are not able to compete with low cost natural gas produced electricity in the market. The PUCO accepted a negotiated plan of 8 years to begin in June 2016 and expire in May 2024. As the wholesale market has changed, the utility system(s) had to come up with “innovative” ways to keep operating their facilities and it looks like everyone in the FirstEnergy (and AEP) footprint will see increased distribution costs passed along to them. This ruling, if approved, will have no effect on your ability to participate or secure your power on the open market.
When all the dust settles and no matter the “spin”, this is a shift from de-regulation to, at least for now, partial re-regulation. According to FirstEnergy’s analysis, this program will “save” consumers $590 Million – the Ohio Consumers Council independent study asserts it will cost us $3.9 Billion, this is quite a spread. Now more than ever, we as consumers in Ohio need to make our collective voices heard.
Write/Call/Email – Since the first word of the acronym for the PUCO is Public, as ratepayers within the great state of Ohio, if we collectively express our displeasure with the pending approval of the PPA, maybe we will be heard. Not all that long ago, in the AEP market after a rate plan went into effect, there was a public outcry. The PUCO reversed their decision and had AEP return to their prior rate structure until a new and more “reasonable” plan was adopted. Can history repeat itself?
Update: New hearings have been set by an administrative judge at the PUCO regarding FirstEnergy’s PPA to begin on January 14th with no timeline announced for conclusion. The AEP PPA was approved by staff at the PUCO on 12/14/2015 but still has to be signed off by the commissioners.