February 23, 2017 Read More →

FirstEnergy’s Latest Subsidy Strategy

Tom Knox for Columbus Business First:

The fight over the future of Ohio’s legacy power plants is about to heat up with a new wrinkle as a utility attempts to have customers subsidize the state’s two nuclear power plants.

Ohio just labored through a similar debate on a question roiling energy policy in several states: Should customers be on the hook to support older power plants owned by the state’s legacy utilities so they can compete against newer natural-gas-fired plants built by competitors. Ohio alone has at least 10 plants in development.

That debate was over plants powered by coal. Now Akron-based FirstEnergy Corp. wants to do something comparable for its two nuclear power plants, and it’s pitching its plan to legislators.

“This would be very important and I confess I don’t know where we’re going to come out on this yet,” Rep. Bill Seitz, R-Cincinnati, said Tuesday at an energy conference in Columbus. “It’s a very difficult issue for those of us whose natural inclination is to recognize free markets.”

Utilities in Ohio, including FirstEnergy and Columbus-based American Electric Power Company Inc. (NYSE:AEP), last year got approval from state regulators for customers to subsidize some of its coal-fired power plants, although federal regulators effectively overruled the decision.

The Davis-Besse plant in Ottawa County and the Perry plant in Lake County are the largest employers in those counties, with about 1,400 workers, FirstEnergy says. They are the only two nuclear power plants in the state and provide much of Ohio’s power output free of air-polluting emissions.

FirstEnergy (NYSE:FE) has not disclosed details of its proposal to shore up its nuclear plants but Seitz said it would increase rates for customers in FirstEnergy’s service territory in northern Ohio by 5 percent, comparing it to similar plans approved for utilities in Illinois and New York. AEP customers would not be affected.

Illinois lawmakers in December approved zero emission credits for two power plants in that state owned by Exelon Corp. (NYSE: EXC) that will get $235 million a year for a decade. The plants are not competitive in the open market but because they don’t emit environmentally harmful carbon emissions and are major employers, lawmakers decided they should get credits paid for by customers. Exelon had planned to shut down the plants by next year because they were losing hundreds of millions of dollars.

FirstEnergy asking for ‘zero-emission’ subsidies for its Ohio nuclear plants

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