This week Politico reported that Trump administration plans to save aging coal and nuclear plants have stalled in the absence of clearly identified financial backing. Some speculated the cost burden would fall squarely on the shoulders of customers – potentially bearing an annual price tag of $9.7 billion to $17.2 billion.
Energy Secretary Rick Perry argued the price tag is well worth the infrastructure resiliency afforded by coal and nuclear power plants which are capable of storing months of fuel.
All five of the Federal Energy Regulatory Commission (FERC) members countered there is no emergency justification for the bailout and that the unprecedented federal intervention could lead to an unraveling of wholesale power markets.
Sustained by shared opposition from Trump’s advisers on both the National Security Council and the National Economic Council, without significant tolerance for price increases to pay for the plan, it’s possible as the list of coal and nuclear plants under bankruptcy grows, Trump is quietly walking back his support for coal’s Hail Mary – at least for now.
All five members of FERC, the regulatory group responsible for the U.S. power grid, stated there is nothing to suggest an forthcoming emergency in the country’s electricity markets. Their testimony before Tuesday’s Senate hearing could undermine the Trump administration’s efforts to save ailing coal and nuclear plants through subsidies. Many of the plants have closed or signaled closure in the face of plentiful natural gas, growth in wind and solar power, and stagnant power demand.
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.
With all of the commotion around the PPA filings, it seems like it has been years since the announcement of the capacity performance approval. It is important to mention that Capacity Performance will become effective very soon, in June of this year. It has come to our attention that various suppliers have begun to send out correspondence in regards to it. As a friendly reminder, if you signed into an agreement prior to the June 5th, 2015 announcement that extends beyond June 2016, it is very likely that you will see an increase to your current electric supply rate.
Please see below for a short recap of the approved federal regulatory change:
In short, “Capacity Performance” (CP) is a reformation that was approved by FERC last June, that will ultimately increase your current electric capacity cost.
CP is a new product developed in response to the extreme conditions during the 2014 Polar Vortex phenomena, where 22% of total capacity experienced supply outages.
The change to the design of PJM’s capacity market will act as an insurance policy to protect the grid from future power interruptions.
Customers with supply contracts beyond June 2016, will likely see pass through charges (change of law) effective with the June 2016 billing month. For a more detailed look on how capacity performance will affect you and your business, download our Capacity Performance White Paper.
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