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E&E News
2 days ago
- Business
- E&E News
Two 1950s coal plants defy financial gravity along the Ohio River
An Ohio law that took effect last week ended a decadelong subsidy program buttressing a pair of Rust Belt coal plants from volatile power markets. But the Kyger Creek and Clifty Creek plants along the Ohio River — each of which turns 70 this year — show no sign of giving in to financial pressures that have claimed dozens of similar generators in the region in past years. Their endurance is partly a sign of the times. The plants, owned by a consortium of eight utilities known as the Ohio Valley Electric Corp. (OVEC), sell their output into the nation's largest power market operated by PJM Interconnection, which is expecting a tsunami of new demand from data centers. And the coal industry, which faced headwinds under President Joe Biden, again has an ally in the White House. Advertisement Most importantly, OVEC companies are bound by a contract that calls for the plants, still saddled by nearly $1 billion in debt, to continue operating for 15 years. Any decision to pull the plug, or change how the plants are operated, must be the consensus of all the owners — a reason that utility lawyers and lobbyists have worked relentlessly to recover every dollar they can. The nature of the operating agreement has frustrated environmental groups because the plants are major sources of air pollution in the region. And while many of the area's large coal-burning power plants have been forced offline by failing economics — including the 2,000-megawatt Conesville plant, 2,200-MW Sammis plant and 1,300-MW Zimmer plants in Ohio — the OVEC plants keep going. Even critics agree there's likely to be little change in the future despite the loss of the subsidies in Ohio, a provision still stained by a connection to the state's largest-ever public corruption scandal. Devi Glick, senior principal with Synapse Energy Economics, has analyzed OVEC's economics as an expert witness in Ohio and Michigan over the past few years on behalf of groups ranging from the Sierra Club to the Michigan attorney general's office. She doesn't see the plants' owners taking any steps to shut them down. 'Given the current political climate and how tight the (PJM) capacity market is right now … I don't see the pressure being enough in the next couple of years,' Glick said. Columbus, Ohio-based American Electric Power has the largest stake in the plants with more than 43 percent. An AEP executive is OVEC's president. In an email response to questions, AEP spokesman Scott Blake said the state of the power market demonstrates a need for the plants. He cited soaring clearing prices in the recent PJM auction for power plant capacity — the cost of guaranteeing there will be power available at peak times — as proof there's increasing need for generating capacity. The PJM auction 'demonstrates that resources like the Clifty Creek and Kyger Creek facilities serve a critical reliability function,' Blake said. 'Customers and the communities around the facilities have benefited from reliable power produced and [the] economic contributions of the plants.' Neil Waggoner, who spent a decade working to help shut down coal plants as an Ohio-based member of the Sierra Club's Beyond Coal campaign, said the subsidies authorized by state utility regulators in 2016 and later embedded in statute were never about preventing the plants from closing or protecting jobs. Waggoner, now part of Sierra Club's federal policy team, said the issue centered around protecting the bottom lines of three Ohio utilities contractually obligated to help pay the costs to operate the OVEC plants. It is that contract, known as the inter-company power agreement, that has kept the plants running and will continue to do so, he said. 'That is the No. 1 driver of what happens,' said Waggoner, who said some of OVEC's owners such as Kentucky Utilities, Louisville Gas and Electric, Centerpoint Energy, Indiana Michigan Power and Allegheny Energy operate in coal-friendly states where there's little if any scrutiny of the costs to operate the plants. The 1,304-MW Clifty Creek plant in Indiana and the 1,086-MW Kyger Creek plant in Ohio trace their roots back to the Cold War era. OVEC was founded in the early 1950s to supply power to the Atomic Energy Commission's uranium enrichment plant in Piketon, Ohio. OVEC's contract with the AEC's successor, the Department of Energy, ended in 2003. Bleeding red ink Rather than shutter their coal plants, OVEC's owners twice extended an agreement among themselves to continue operating and selling power into PJM's regional grid. The last extension in 2010 was necessary to help finance more than $1 billion in pollution controls and calls for the plants to operate until 2040, when they would be 85 years old. It was a decision that years later would send the utilities to the Public Utilities Commission of Ohio (PUCO) in search of financial help, and ultimately lead them to lobby the Legislature to entrench the subsidies in state law. The provision worked like this: The share of OVEC's output that was assigned to three Ohio utilities was sold into the PJM market. If revenues were less than the plant's cost of producing electricity, utility customers made up the difference. If revenues exceeded costs, customers got a credit. The mechanism helped OVEC weather ups and downs over the past decade, from surges and dips in natural gas prices, a global pandemic and, most recently, a projected surge in demand for electricity — one not seen in generations — to help power AI data centers. While prices in PJM are on the rise, so too are OVEC's costs. 'These plants are not getting any less expensive to operate, it's just that the supply of alternatives is becoming more constrained,' said Glick. 'At some point the supply will catch up, and these plants will still be old and expensive.' Fitch Ratings, in a December report, concluded the plants are likely to bleed red ink even with improvement in power demand and prices. 'While regional demand growth (especially from data centers) might tighten energy markets, Fitch expects OVEC's all-in costs to exceed prevailing merchant power prices, making the plants uneconomical for the foreseeable future,' the ratings company said. Regulators in at least one state have already taken notice. The Michigan Public Service Commission has three times disallowed recovery of more than $1 million in power costs by Indiana Michigan Power, which supplies electricity to about 133,000 customers in the southwest tip of the state. In those cases, Michigan regulators agreed that the utility, a unit of AEP, violated the state's code of conduct for affiliate transactions by paying above-market prices for power from OVEC. The PSC previously had made similar rulings that were upheld by the courts. And the commission had warned the utility to manage existing contracts to provide value for ratepayers, or regulators would be hard-pressed to consider more ratepayer recovery. The contract supersedes everything The utility's response: It found a more willing buyer in Indiana. The company told Indiana regulators that the state had a need for energy and capacity as large new electricity users, primarily data centers, began taking service, and that the OVEC plants provided an 'economically competitive resource.' The company further argued that the proposal was consistent with state policy to support existing coal plants. Despite Michigan regulators repeatedly slapping the utility's hand for trying to pass on above-market costs for power to consumers, Indiana's Regulatory Utility Commission bought in and approved the plan. 'It's just sort of indicative of Indiana being this incredibly favorable regulatory environment for energy holding companies,' said Kerwin Olson, executive director of the Citizens Action Coalition, an environmental and consumer advocacy group. 'It's just a big cash cow for these guys.' Glick, who provided testimony in the Michigan case, compared it to a child gaming their parents to get what they want. 'They asked mom and didn't like mom's answer, so they went to dad and got a better answer,' she said. Just as they did in Indiana this year, AEP promised big benefits to Ohio consumers in 2016 if utility regulators would approve a mechanism to insulate OVEC against higher natural gas prices, which strongly influenced power costs. The utility estimated that customers of AEP's Ohio Power Co. would see $110 million in benefits over eight years. The Public Utilities Commission of Ohio was convinced and approved what was effectively a revenue guarantee for the plants. They also approved similar requests by Duke Energy and Dayton Power & Light. Consumer groups, however, say the provision was no hedge. It was a financial albatross. An analysis by the Ohio Manufacturers Association estimates the subsidies approved by PUCO and later the Ohio Legislature cost utility consumers almost $600 million. The group projects the amount would have topped $1 billion by the time the law was supposed to sunset in 2030. In just one of the eight years that the mechanism was in place did the plants produce a net benefit to ratepayers, the report said. Meanwhile, efforts by OVEC utilities to sell their stake in the plants have received no takers. And when Akron-based FirstEnergy filed for bankruptcy protection in 2019, the utility unsuccessfully sought to get out from under its OVEC commitment, a request that the coal plants' other owners balked at because it would have required them to increase their ownership stake. While the meter has stopped running on OVEC subsidies in Ohio, the legal and regulatory battle over millions of dollars collected from Buckeye State consumers continues. Environmental and consumer groups are seeking to claw back hundreds of millions of dollars in OVEC charges already paid by customers — claims that the utilities are challenging. The groups are before the Ohio Supreme Court challenging an audit approved by the PUCO that determined the OVEC subsidies charged in 2020 were appropriate. A similar case for charges in 2021 to 2023 is currently pending before Ohio regulators. And the groups have petitioned the commission to audit charges for 2024 and part of 2025. At the core of the argument is the claim by advocates that OVEC's owners operated the coal plants more frequently than were justified by economics because the utilities knew they could pass on any losses to Ohio ratepayers. Typically, to minimize costs to consumers, grid operator PJM dispatches power plants according to their cost to operate. More costly units come online as a last resort to keep the lights on. By contrast, units designated as 'must run' or self-scheduled units are operated according to the owners, regardless of economics. The consumer groups say that's not what's happened with OVEC. Once again, critics say, the contract among the plants' owners supersedes everything. 'One of the really challenging things,' said Glick, is that 'nobody can really practice oversight on them because of how complicated their ownership structure is.'
Yahoo
05-06-2025
- Business
- Yahoo
Kentucky public schools depend on federal funding. We can't afford to lose it.
Because our social media feeds and cable news networks have focused on hot-button issues in education, you may have missed an important development. The US House of Representatives passed a resolution to cut education and workforce funding by $330 billion over the next 10 years. Commentators and pundits debate education funding and dismiss investments as waste without ever defining the term. Unfortunately, a critical voice is missing from this much-needed conversation: educators. As CEO of the Ohio Valley Educational Cooperative (OVEC), I work with an incredible team of education experts to support 14 Kentucky public school districts as they work to educate the next generation. We do so by spearheading programs and initiatives that help teachers develop professionally, learn new skills in the classroom and even recruit new Kentucky teachers. Programs like Teach Tech Kentucky, which empowers teachers to include technology and computational thinking into their existing curricula, are helping fuel tomorrow's workforce. Additionally, OVEC's teacher apprenticeship program is primed to bring new teachers into classrooms so our students receive more individualized instruction. Opinion: We have money to fight Kentucky's opioid crisis. Let's not waste it. While we fill a vital role, districts rely heavily on federal support to maintain quality educational experiences for students, recruit and retain high-quality teachers and ensure student success in the classroom, workplace and community. To understand the potential impacts on Kentucky public schools, teachers and students, it is important to know the facts. That means understanding how much districts currently receive from the federal government. The Kentucky Center for Economic Policy (KCEP) conducted a study and analyzed districts' budgets from across the state to determine how much federal funding districts receive. The study found that OVEC districts — and Kentucky public schools more broadly —can't make ends meet without federal funding. According to KCEP, OVEC districts collectively receive $413 million in federal funding per year. On average, approximately 18% of an OVEC district's funding comes from the federal government. The numbers vary from district to district, but some areas in our region could lose 24% of their funding if federal education funding is eliminated. Opinion: We are business leaders. Tariffs will trigger cost-of-living crisis in Kentucky. Resources that students rely on through programs like free and reduced school lunch, Title I and the Individuals With Disabilities Education Act all are at risk if federal education dollars are cut. These funds are also used to assist students prepare to join the workforce. There is no doubt that the future of Kentucky public schools is on the line, and while education may be a hotly contested subject, one thing we all can agree on is Kentucky's kids are a worthy investment. Urge your congressional representatives to fund our future and protect investments in education funding. Tell us what you think. Submit a letter to the editor. Jason Adkins is the CEO of Ohio Valley Educational Cooperative (OVEC). This article originally appeared on Louisville Courier Journal: Federal funding cuts will put KY public education at risk | Opinion
Yahoo
21-05-2025
- Business
- Yahoo
FirstEnergy continues effort to raise prices as Ohio repeals scandal-ridden bill
Smart energy meter. (Stock photo via Getty Images) While energy prices are set to jump this summer, Ohio Gov. Mike DeWine signed a bill into law that could provide some relief — eliminating a subsidy from the scandal-ridden Ohio House Bill 6 that requires ratepayers to fund unprofitable coal plants. As this happens, utility companies are moving to increase consumers' bills. Back in 2019, Former Ohio House Speaker Larry Householder took and funneled $61 million worth of bribes in exchange for legislation to give utility company FirstEnergy a $1 billion bailout, named H.B. 6, all at ratepayers' expense. In March 2023, a jury found that Householder and former GOP leader Matt Borges, beyond a reasonable doubt, participated in the racketeering scheme that left four men guilty and two dead. In late June that year, federal judge Timothy Black sentenced Householder to 20 years in prison. Borges got five years for his role in the scheme, but most importantly, he attempted to bribe Tyler Fehrman, an FBI whistleblower, with $15,000 to help kill a repeal effort he was working on. On video, Borges told Fehrman that if he told anyone about the bribe, he would 'blow up' his house. While some of H.B. 6 was overturned already, ratepayers have been paying a subsidy that funds two Ohio Valley Electric Corporation coal plants — one in Southern Ohio and one in Indiana. The main beneficiaries for OVEC are American Electric Power Company (AEP), Duke Energy and AES Ohio. Still, FirstEnergy collects payment for it. But with the swipe of a pen — consumers will likely see their bills go down. DeWine signed a massive energy overhaul bill, H.B. 15, on Friday. It repeals the OVEC charges. A study commissioned by the Ohio Manufacturers' Association found that in 2024 alone, these subsidies cost ratepayers roughly $200 million. The company lost more than $100 million the same year, so consumers are paying for plants that aren't profitable. Consumers can expect to save between $1.30 and $1.50 per month, depending on their utility provider, according to the Energy News Network. The subsidies may not seem like a lot every month, but they add up when inflation is high and people struggle. 'It makes a difference, especially in today's day and age with a kind of shaky economy and folks trying to just make ends meet,' Fehrman said. While this will save citizens a bit of money, Householder attorney Scott Pullins argues that this will hurt the rural areas it serves. 'They are major high-paying jobs in the area, and the kind of area where there aren't very many high-paying jobs,' Pullins said about the plant jobs. 'They generate a whole boatload of taxes for schools in those areas. And if those plants get shut down, it's going to be devastating for those communities.' The Ohio plant employs many Ohioans, he added. But now, this may embolden utility companies to ask for more rate hikes, he said. This is already happening. 'Our electric grid needs to be modernized,' Pullins said. 'I'm assuming that those are where those costs are going. I think we do need a robust regulatory scheme to make sure these companies aren't wasting these funds.' FirstEnergy is now petitioning the Public Utilities Commission of Ohio (PUCO) to raise its prices — a $190 million increase in its charges. If approved, the Ohio Consumers' Counsel estimated that Cleveland Illuminating Company consumers will see a $13 price increase per month, Ohio Edison will have a $3 spike, and Toledo Edison at $1.50. On Monday, DeWine said he doesn't have an opinion on the price increases. 'As far as the raising of bills, ultimately, as you know, this is up to the PUCO,' he said. Fehrman said this shouldn't be allowed. 'There is this massive scandal where these companies tried to put a larger burden on the backs of every single Ohioan,' he said. 'And now, they're asking for more money in a time when folks are already struggling.' The bill will go into effect in 90 days. SUPPORT: YOU MAKE OUR WORK POSSIBLE SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
30-04-2025
- Business
- Yahoo
Lawmakers pass energy bill ending Ohio ratepayer charges that subsidize two unprofitable coal plants
COLUMBUS, Ohio (AP) — After years of attempts, Ohio lawmakers voted Wednesday to end the subsidy for two unprofitable Cold War-era coal plants that had cost Ohio ratepayers nearly $400,000 a day, after they were tucked into the tainted energy bill at the center of the largest corruption scandal in state history. House Bill 15 would put an immediate end to the 'legacy generation rider' for the two Ohio Valley Electric Corp. plants contained in House Bill 6, which dates back to 2019. The provision was part of a larger overhaul intended to modernize Ohio energy policy. The Ohio Senate passed its version of the legislation in a rare unanimous vote Wednesday, before sending it back to the Ohio House. The lower chamber approved Senate changes to the House version 94-2. The bill goes next to Gov. Mike DeWine, whose office said he is reviewing the amended measure. State Rep. Casey Weinstein, a Hudson Democrat, praised the measure's passage, calling the end of the 'bailout' of the two coal two plants — one in southern Ohio, one in Madison, Indiana, southwest of Cincinnati — a huge win for consumers. 'It was an outrageous misuse of public funds — sending hundreds of thousands of dollars a day to an aging coal plant in Indiana," he said in a statement. "Putting an end to that is a victory for ratepayers across the state.' The bill also requires utilities to routinely come in for rate cases and justify how they spend ratepayer-collected money; creates a permissive school energy efficiency loan program to reduce energy costs for public schools; and codifies that consumers must receive refunds for improper charges. Ohio Manufacturing Association President Ryan Augsburger said repealing the uneconomical subsidies and other charges and creating energy 'heat maps' that visually depict energy usage patterns will allow manufacturers to operate more efficiently. 'Ohio has an abundance of natural resources, a strong workforce, world-class educational institutions and now the foundation for a nationally leading energy industry,' he said in a statement. "Now is the time for Ohio's energy system to pull ahead and attract new generation, bringing with it new economic investments.' The OVEC subsidy was a late addition to the measure passed Wednesday, which initially focused on a $1 billion bailout for two nuclear power plants owned by a then-subsidiary of Akron-based FirstEnergy Corp. It was to have been collected through Ohioans' electric bills through 2030. The Legislature repealed the nuclear plant subsidy contained in the bill in 2021, months after then-Ohio House Speaker Larry Householder and four others were indicted for their roles in a $60 million bribery scheme secretly funded by FirstEnergy to win passage of the bailout bill. But the coal plant subsidy has been tougher to eliminate. The two plants were built in the 1950s to provide power to a uranium enrichment facility in Pike County, but the contract with the U.S. Department of Energy ended in 2003 and OVEC began selling power to the regional power grid. The rise of cheaper and abundant natural gas helped make the plants unprofitable. The state's utility watchdog at one point said the coal plant subsidy was worse than the one for the nuclear plants, because it helped sustain plants whose electricity wasn't needed and that pollute the air.
Winnipeg Free Press
30-04-2025
- Business
- Winnipeg Free Press
Lawmakers pass energy bill ending Ohio ratepayer charges that subsidize two unprofitable coal plants
COLUMBUS, Ohio (AP) — After years of attempts, Ohio lawmakers voted Wednesday to end the subsidy for two unprofitable Cold War-era coal plants that had cost Ohio ratepayers nearly $400,000 a day, after they were tucked into the tainted energy bill at the center of the largest corruption scandal in state history. House Bill 15 would put an immediate end to the 'legacy generation rider' for the two Ohio Valley Electric Corp. plants contained in House Bill 6, which dates back to 2019. The provision was part of a larger overhaul intended to modernize Ohio energy policy. The Ohio Senate passed its version of the legislation in a rare unanimous vote Wednesday, before sending it back to the Ohio House. The lower chamber approved Senate changes to the House version 94-2. The bill goes next to Gov. Mike DeWine, whose office said he is reviewing the amended measure. State Rep. Casey Weinstein, a Hudson Democrat, praised the measure's passage, calling the end of the 'bailout' of the two coal two plants — one in southern Ohio, one in Madison, Indiana, southwest of Cincinnati — a huge win for consumers. 'It was an outrageous misuse of public funds — sending hundreds of thousands of dollars a day to an aging coal plant in Indiana,' he said in a statement. 'Putting an end to that is a victory for ratepayers across the state.' The bill also requires utilities to routinely come in for rate cases and justify how they spend ratepayer-collected money; creates a permissive school energy efficiency loan program to reduce energy costs for public schools; and codifies that consumers must receive refunds for improper charges. Ohio Manufacturing Association President Ryan Augsburger said repealing the uneconomical subsidies and other charges and creating energy 'heat maps' that visually depict energy usage patterns will allow manufacturers to operate more efficiently. 'Ohio has an abundance of natural resources, a strong workforce, world-class educational institutions and now the foundation for a nationally leading energy industry,' he said in a statement. 'Now is the time for Ohio's energy system to pull ahead and attract new generation, bringing with it new economic investments.' The OVEC subsidy was a late addition to the measure passed Wednesday, which initially focused on a $1 billion bailout for two nuclear power plants owned by a then-subsidiary of Akron-based FirstEnergy Corp. It was to have been collected through Ohioans' electric bills through 2030. The Legislature repealed the nuclear plant subsidy contained in the bill in 2021, months after then-Ohio House Speaker Larry Householder and four others were indicted for their roles in a $60 million bribery scheme secretly funded by FirstEnergy to win passage of the bailout bill. But the coal plant subsidy has been tougher to eliminate. The two plants were built in the 1950s to provide power to a uranium enrichment facility in Pike County, but the contract with the U.S. Department of Energy ended in 2003 and OVEC began selling power to the regional power grid. The rise of cheaper and abundant natural gas helped make the plants unprofitable. The state's utility watchdog at one point said the coal plant subsidy was worse than the one for the nuclear plants, because it helped sustain plants whose electricity wasn't needed and that pollute the air.
