Ohio utility regulators have come out against a proposal from U.S. Energy Secretary Rick Perry that would force the market to subsidize coal-fired and nuclear power plants, saying the result would be billions of dollars in cost increases.
The Public Utilities Commission of Ohio issued a formal response, saying it is “deeply concerned about the additional costs that will be borne by Ohio’s consumers and businesses.”
The commission estimates the additional cost would total $8.1 billion, which would be paid by consumers in the multi-state grid region that includes Ohio.
The PUCO’s comments this week are part of a flurry of testimony in the past few days as the Federal Energy Regulatory Commission reviews Perry’s plan.
Others that commented included a coalition of a dozen energy industry trade associations, which oppose the rule because of the way it would distort the market in favor of older and less-competitive power plants. The group includes associations that represent just about every form of energy generation except coal and nuclear.
On the other side are businesses involved with coal and nuclear, which support the plan.
Paul Bailey, president and CEO of the American Coalition for Clean Coal Electricity, said last month that the ideas behind the rule are “long-overdue market reforms.”
Perry announced his proposal late last month. It would create incentives for power plants that have their fuel on site, which would cover coal and nuclear but not other major fuels, such as natural gas and most renewables.
“A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families,” Perry said in the initial announcement.
However, Perry and the Trump administration cannot unilaterally approve the plan. They must go through the federal energy panel, which is doing a 60-day review. Although the panel is made up of political appointees, it does have the ability to revise or even reject plans that it sees as harmful.
There also is a possibility, or even a likelihood, of court challenges.
The PUCO uses stark terms to describe what may happen if the plan is adopted, saying the consequences “could be dire.”
“I want to give credit to the (PUCO) for doing the right thing here,” said Rob Kelter, a senior attorney for the Environmental Law & Policy Center, a Chicago-based advocacy group that often works on Ohio issues.
The PUCO’s stance here appears to be at odds with a decision last year when it approved plans to allow guaranteed profits for certain coal-fired power plants operated in Ohio by American Electric Power and FirstEnergy. The subsidy was later thrown out by federal regulators in response to a number of concerns.
Now, the PUCO and federal officials seem to be on opposite sides of a similar debate over power-plant subsidies. Kelter noted that there has been some turnover on the PUCO, which may explain some of the shift.
“I think this commission is taking a fresh look at some things,” he said. “They may not have made the right decision on (on some previous cases), but they are 100 percent dead-on here.”
Large energy generators, such as American Electric Power, have many types of power plants and stand to both gain and lose from the proposal, depending on the plant. The Columbus-based company says it has concerns about Perry’s approach.
“AEP supports the Department of Energy’s interest in maintaining a safe, reliable and resilient grid. However we don’t believe that the proposed path … will arrive at the desired goal,” said Melissa McHenry, an AEP spokeswoman.