Nuclear Subsidies Distort Markets, Hurt Business, Say FirstEnergy Opponents
May 10, 2017
Cleveland Plain Dealer. Business and consumer groups joined forces Tuesday to oppose FirstEnergy’s plan to change Ohio law to create new subsidies for the power company’s nuclear power plants.
On the opposite side, supporting FirstEnergy, were unions, a contractor’s group, and the Perry local school district, which benefits from taxes from the Perry nuclear power plant.
The Ohio Manufacturers’ Association, the Ohio Consumers’ Counsel, the Lordstown Energy Center, Dynegy, now the state’s largest owner of coal-fired power plants, the American Petroleum Institute and the Electric Power Supply Association were among more than a dozen groups testifying against enabling legislation before the Ohio House Public Utilities Committee.
“House Bill 178 or the Zero Emission Nuclear credit bill would provide an enormous subsidy to one nuclear operator for units that they contend are no longer economic to operate,” said Robert Flexon, CEO of Houston-based Dynegy Inc.
“Our economy will not grow and prosper by artificially keeping alive business that can no longer compete in the marketplace through expensive subsidies,” he told lawmakers. “That has been the case throughout American history. Were that not so, we’d still have buggy whip and icebox manufacturers and teletype and elevators operators.”
Later in an interview, Flexon said the zero emissions argument, meaning the plants deserve higher rates because they don’t produce carbon dioxide, is a “red herring.”
“The nuclear plants are deeply out of the money. You [the state] would be throwing billions of dollars down a nuclear waste hole. These plants can’t live without subsidies. Why do you want to put more bills on your citizens? It’s beyond me.”
Flexon was joined by William Siderewicz, president of Boston-based Clean Energy Future, which is building four gas turbine power plants at two northern Ohio locations, including Lordstown.
You would be throwing billions of dollars down a nuclear waste hole. These plants can’t live without subsidies.”
Calling for the House to “summarily reject” any form of the legislation, Siderewicz charged that FirstEnergy’s objective was not to save Davis-Besse and Perry nuclear power plants, but to prepare for selling the plants or closing them and paying for the decommissioning.
Former Republican lawmaker Jeff Jadobson, now a lobbyist, appeared before the committee on behalf of the Ohio Consumers’ Counsel and the Northeast Ohio Public Energy Council, which oppose the bill.
He said Ohio consumers are stuck with the 18th highest electric rate in the nation despite being “awash in shale oil and natural gas that have given us historically low gas prices” — which is leading to a building boom in new gas plants.
“But there is a problem that is preventing Ohio families and businesses from realizing the full benefits of lower prices in the market,” he said. “That problem is the continuing requests by Oho electric utilities — now years since the 1999 deregulation law’s transition period ended — for consumers to pay subsidies above the market price of electricity.”
He said FirstEnergy received $9.8 billion in subsidies between 2001 and 2010 to help it transition from the old regulated markets to competitive deregulated markets. And as of Jan. 1, the company has been permitted to collect an additional $204 million a year for up to five years in additional subsidies.
“FirstEnergy is back. Respectively, you should stop this cycle of subsidies and give consumers more of the benefit of competition intended under the 1999 law,” he told the lawmakers.
Earlier in the day, Chris Zeigler, executive director of the American Petroleum Institute’s Ohio division, and Erica Bowman, API chief economist, told reporters that FirstEnergy’s proposed subsidies could stall the development of the 10 or more gas turbine power plants proposed or already being built in Ohio. And in turn, that could stall further development of Ohio’s rich shale gas deposits.
Bowman also testified, concluding that API is strongly opposed to House Bill 178. It would skew markets by propping up uncompetitive nuclear generation, increase costs for ratepayers and job-creating industries, and discourage investment in natural gas production and gas-fired power plants. ”
Other opponents included the Ohio Environmental Council, AARP Ohio, the League of Women Voters of Ohio, Ohio Citizen Action the Environmental Defense Fund and the Nuclear Information and Resource Service.
FirstEnergy initially asked that lawmakers vote on the bill by June 30, but at this point that is not expected to happen.
All of the testimony is posted on the committee’s website.
By John Funk
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