Ohio Governor Signs Coal and Nuclear Bailout at Expense of Renewable Energy

Updated July 26 with FirstEnergy Solutions announcing that, with the state bailout for its nuclear plants, the utility will now have funding to keep an aging coal plant also running.

In a year when several states have taken big steps to embrace a future that runs on renewable energy, Ohio is taking a leap in the opposite direction.

The Ohio legislature passed a measure Tuesday that cuts renewable energy and energy efficiency programs while adding subsidies for nuclear and coal-fired power plants—a policy cocktail that opponents say is backward-looking and harmful to the economy, consumers and the environment.

Gov. Mike DeWine, a Republican, signed the bill into law within hours.

Opponents were unable to match the political power of FirstEnergy Solutions, the owner of the state’s two nuclear plants, and its allies.

While much of the debate was about nuclear power, the law may end up functioning as more of a coal bailout.

On Friday, FirstEnergy Solutions said it had decided to cancel plans to close the W.H. Sammis coal-fired power plant, an eastern Ohio plant that has been described as a “super-polluter.” The plant, previously scheduled to shut down in 2022, is not covered by the bailout law, but the windfall from the bailout money is improving the company’s finances enough to make moves unrelated to the nuclear plants.

The new law is in line with Ohio’s recent history of hostility to renewable energy, while also making the state an outlier as several other states have increased their support for renewable energy, including plans to move to 100 percent carbon-free or renewable electricity, most recently in Maine and New York.

“This is one of the worst pieces of energy related legislation we’ve seen,” said Dan Sawmiller, Ohio energy policy director for the Natural Resources Defense Council.

His group was one of many across the business and political spectrum that fought the bill, a rare moment in which environmental advocates such as the Sierra Club were on the same side as the American Petroleum Institute.

“We are bailing out a corporation, a failing corporation,” while harming the growing wind and solar industries, said Rep. Casey Weinstein, a Democrat.

He said the legislation would steer solar and wind investment away from Ohio and toward neighboring states such as Michigan. Other states, including South Carolina and Georgia, are being much more forward thinking about renewable energy, he said.

The Ohio Senate passed the bill 19-12 last week, but the House put off its vote until Tuesday because several lawmakers were absent and the bill would not have passed without them.

DeWine’s office went so far as to approve the use of state aircraft to pick up two lawmakers from a conference in Chicago so they would be in Columbus for the Tuesday vote, though that flight plan was eventually canceled when the lawmakers determined they could drive back.

The Debate Blurred Party Lines

Supporters said the bailout was necessary to preserve some 4,300 jobs and to intervene in an electricity market that they say does not adequately value nuclear power.

FirstEnergy Solutions, which is in bankruptcy protection, had said its nuclear plants were not profitable enough to continue to operate and would need to close in 2020 and 2021 unless they received more support—about $150 million per year. However, the company has not provided the public with evidence of the plants’ financial condition.

The bailout is indirectly helping the Sammis coal plant. Last month, FirstEnergy Solutions CEO John Judge spoke at a public forum in Steubenville, Ohio, about the connection between the nuclear aid, which at that point had not become law, and the old coal-fired plant that his company had intended to shut down.

“House Bill 6 is really designed to help our nuclear plants and all the money from that that came to us would go to those nuclear plants, but at the same time it would make our company economically healthy enough that we would be able to look at other investments like investing in the Sammis plant,” he told WTOV television in Steubenville. Three days after the bill was signed, the company announced it would do just that.

Other states—such as Illinois, New Jersey and New York—have also subsidized their nuclear plants, but they did so as part of larger plans that also supported renewable energy. The states were attempting to retain nuclear as a source of carbon-free energy as part of policies that would help move away from fossil fuels and address climate change. 

Only Ohio moved to give aid to nuclear and coal plants while cutting renewable energy programs.

The Ohio debate blurred partisan lines. Some Democrats supported the bill because of a desire to retain union jobs at the endangered plants. Some Republicans opposed it because they don’t like the idea of subsidies or have concerns that nuclear aid will hurt plants that run on coal or natural gas.

Sen. Joe Uecker, a Republican from the Cincinnati area, said during the Senate debate that the bill would harm competing power plants and reduce the growth in jobs in clean energy industries.

“Investments in Ohio will start disappearing faster than a snow cone in Phoenix,” he said.

Victory for FirstEnergy, Politician It Supported

The new law is a victory for House Speaker Larry Householder, a Republican who rose to his position in January by ousting the incumbent Republican. He made it a top priority to pass nuclear plant subsidies, following a 2018 campaign cycle in which FirstEnergy—the Akron-based utility that until recently owned FirstEnergy Solutions—spent heavily to support him.

This support included donations to Republican primary candidates who had pledged to back Householder’s bid for speaker and have been leading supporters of the bill.

The bill was initially proposed as a clean air program that would provide financial help to nuclear plants and some renewable energy plants. As the bill moved through the political process, the idea of a clean air policy was discarded and replaced with amendments that undercut clean air instead.

Among the new provisions were subsidies for two coal-fired power plants owned by Ohio Valley Electric Corp., one in Ohio and one in Indiana, and both built in the 1950s. This is unrelated to FirstEnergy Solutions’ Sammis plant, which does not receive any direct benefits from the law.

The new law will add two new monthly fees to utility bills across the state. Households will pay up to $1.50 per month to help keep uncompetitive coal plants running, plus up to 85 cents per month into a fund that will provide tens of millions of dollars to support the nuclear plants (businesses would pay more on both charges).

Cuts to Efficiency, Renewable Energy Programs

Much of the opposition to the bill stemmed from lawmakers’ decisions to help pay for the subsidies by reducing charges for programs that support renewable energy and energy efficiency—programs that reduce greenhouse gases and help to lower customers’ power bills.

Under the law DeWine signed, utilities will now only be required to get 8.5 percent of their electricity from renewable sources by the end of 2026—down from a target of 12.5 percent. At one point, a version of the bill would have eliminated the renewable energy standard entirely. Ohio’s renewable energy standard is already modest compared to most states.

The new law also freezes annual increases in energy efficiency standards at the end of 2020, meaning utilities will no longer need to operate programs that help customers reduce their energy use. Consumer advocates say the cuts to energy efficiency are especially harmful because the programs lead to savings that exceed their costs. The net savings were $5.1 billion from 2009 to 2017.

As the bill moved toward passing, opponents spoke about next steps, including how to make this an issue in 2020 legislative elections and the possibility of sponsoring a statewide referendum to overturn the future law.

Bill Siderewicz, president of Clean Energy Future, a company that has developed natural gas power plants in Ohio, has hinted at a referendum. He opposes the bill because he thinks it gives nuclear plants an advantage over natural gas.

“The simple answer is that poll after poll shows that voters are AGAINST utilities’ BAILOUTS in Ohio!!!” he wrote in an email before the Senate vote.