Ohio Committee Suspends FirstEnergy’s Nuclear Power Rescue Plan

Ohio-based FirstEnergy’s plan for a rescue of its two uncompetitive Ohio nuclear plants took a nosedive May 17, as the Ohio House Public Utilities Committee suspended action on the company’s proposal to charge its customers a fee to subsidize the plants.

FirstEnergy’s plan mimics programs adopted in Illinois and New York to create “zero energy credits,” or ZECs, allowing the company to make competitive bids into the PJM regional wholesale market.

The chairman of the House committee, William Seitz, a Cincinnati Republican, suspended further hearings on the measure (House Bill 178). “We have heard over 10 hours of testimony on this bill. I have given proponents and opponents a chance to make their case. I am not sensing a keen desire on the part of the House members to vote on this and doubt that we will have more hearings in the near future unless something cataclysmic happens,” Seitz said.

Cleveland newspaper The Plain Dealer suggested “cataclysmic events might include a decision by FirstEnergy Solutions to seek bankruptcy protection from its creditors or a decision by the company to immediately close its four nuclear power plants.” FirstEnergy Solutions is an unregulated subsidiary set up to separate generation from transmission and distribution during the restructuring wave of the 1990s. It owns all of FirstEnergy’s generating assets.

FirstEnergy Solutions has four nuclear units: the long-troubled Davis-Besse 889-MW pressurized water reactor (PWR), the 1,231-MW Perry boiling water reactor, both in Ohio, and the two-unit 1,890-MW Beaver Valley PWR in Pennsylvania, which is also in financial distress but is not part of the Ohio subsidy plan. Nuclear power makes up about 24% of FirstEnergy’s capacity while coal accounts for 56%.

Seitz earlier suggested a compromise that would allow FirstEnergy customers to opt out of the ZEC surcharges. “It seemed to find favor with many of my colleagues but not with FirstEnergy.” The company says its needs about $5 billion to keep its Ohio nukes afloat.

The Environmental Defense Fund has been opposing FirstEnergy’s ZEC plan, as well as earlier plans to bail out the nukes. Dick Munson, who heads EDF’s Midwest Clean Energy project, said, “Hats off to the Ohio House’s Public Utilities Committee for stopping the hearings on FirstEnergy’s nuclear bailout plea, the latest in a long line of attempts to force Ohioans to pay for the utility’s mistakes. The decision reflects the growing, diverse coalition that is challenging unnecessary subsidies to FirstEnergy, which would raise electricity rates and hurt the state’s economy. We hope Ohio policymakers will instead focus on spurring investment and innovation in reliable, efficient, and clean energy markets.”

FirstEnergy CEO Chuck Jones was scheduled to appear before the Ohio Senate Public Utilities Committee the day after the House committee deep-sixed the company proposal. The Senate committee is not expected to take any action unless the House acts first, according to The Plain Dealer. Earlier, Jones said he had been talking to the U.S. Department of Energy about a broad rescue of nuclear units that can’t compete in competitive markets.

Kennedy Maize is a long-time energy journalist and frequent contributor to POWER.