Electricity Markets

Ohio governor signs bill for nuclear, coal plant support

Ohio Gov. Mike DeWine on Tuesday signed a bill that aims to keep online financially challenged nuclear and coal plants.

The governor quickly signed the measure after the state’s House of Representatives approved the bill, HB 6, in a 51-38 vote. The state’s Senate passed the bill on July 17.

The law provides about $150 million a year between 2021 and 2027 for FirstEnergy Solutions’ Davis-Besse and Perry nuclear plants. FirstEnergy Solutions, the generation affiliate of FirstEnergy, filed for bankruptcy court protection in March 2018 and is expected to emerge from bankruptcy later this year.

After it declared bankruptcy, FirstEnergy Solutions announced plans to close the 908-MW Davis-Besse plant in Oak Harbor by 2020, the 1,268-MW Perry plant in Perry in 2021, and the 1,872-MW Beaver Valley station in Shippingport, Pa., in 2021.

FirstEnergy also appealed to the Department of Energy for relief for the plants. Last June, President Donald Trump directed Secretary of Energy Rick Perry to take steps aimed at keeping “fuel-secure” power facilities -- coal-fired generation and nuclear power plants – operational. This June, however, Perry said the DOE did not have “regulatory or statutory ability” to create such incentives.

The new law also provides about $50 million a year through 2030 to keep two Ohio Valley Electric Corp. (OVEC) coal plants, one in Ohio, the other in Indiana, running. American Electric Power, Duke Energy, and Dayton Power & Light are joint owners of OVEC plants.

The law also amends Ohio’s renewable portfolio standard, reducing it from 12.5% to 8.5% in 2026and then eliminating the standard in 2027, and phases out the state’s energy efficiency standards.

State funding for renewable energy would be replaced by a clean air fund that would raise up to $170 million a year. The nuclear plant owners would receive about $150 million a year and the remaining $20 million would be eligible to subsidize six proposed solar plants in the state.

After accounting for the cost of the nuclear and coal subsidies and the reduced spending on renewables and energy efficiency, Republican state Rep. Shane Wilkin, one of the sponsors of HB, said the law would save Ohioans a total of $1.3 billion on their electric bills.

In the months leading up to its passage, HB 6 attracted significant opposition from environmentalists, as well as from the oil and natural gas industry. LS Power, a developer of gas-fired power plants, earlier this month said it would terminate the planned expansion of its natural gas-fired Troy plant in Ohio if HB 6 was passed.

At least one group, Ohioans Against Corporate Bailouts, intends to place a referendum on the 2020 ballot to repeal HB 6.

Passage of HB 6 makes Ohio the fifth state to enact some form of financial support for nuclear power. Illinois was the first, followed by New York and then New Jersey and, most recently, Connecticut, which passed legislation to support Dominion Energy’s Millstone nuclear plant.

Opponents of the subsidies, in particular the Electric Power Supply Association, a trade group for merchant generators, challenged New York’s and Illinois’ so-called Zero Emission Credit programs in court, but the Seventh and Second Circuit Courts of Appeals upheld the New York and Illinois programs, respectively.

In April, the U.S. Supreme Court said it would not accept a petition to review those Circuit Court decisions.