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Big Energy, Little Energy Brace for Legislative Showdown

YOUNGSTOWN, Ohio — Executives and organizations that support the development of independent energy production are calling two bills introduced in the Ohio General Assembly nothing less than a $5 billion bailout for utility giant FirstEnergy Corp. that will saddle residents with higher energy costs.

FirstEnergy says the bills, collectively called the Zero Emissions Nuclear Resource Program, help to preserve nuclear energy as a vital, reliable power source that provides electricity to millions of Ohioans each day, not to mention hundreds of jobs in the industry.

The debate essentially pits large utilities such as FirstEnergy against smaller, independent, non-utilities such as Clean Energy Future, which plans to invest more than $1 billion in the region to build two combined-cycle energy production plants in Lordstown.

“We really can’t find one organization that supports FirstEnergy’s program,” says Bill Siderewicz, president of Boston-based Clean Energy Future. “It’s a mirage that is underhanded and devious.”

Siderewicz says that FirstEnergy’s program – encapsulated in Senate Bill 128 and House Bill 178 – essentially grants the utility a bailout akin to $340 million annually over 16 years, or $5.4 billion over the life of the program.

At issue are FirstEnergy’s two aging nuclear power plants, the Davis-Besse Power Station in Oak Harbor, just east of Toledo, and the Perry Nuclear Generating Station in Perry, 30 miles east of Cleveland.

In February, FirstEnergy announced its intention to exit the power plant business and sell or close both of its nuclear plants in Ohio. They have lost money because new, more technologically advanced generation plants have entered the market and can produce electricity at a lower cost and provide power to consumers at a reduced rate. Plus, since Ohio is a deregulated market, it allows for competitive bidding through the PJM system, which manages the electrical grid in Ohio, 12 other states and Washington, D.C.

FirstEnergy is seeking zero carbon emission credits from the state. But unlike the renewable energy credits once granted to the solar and wind power industry, the zero emission credits would be paid for directly by consumers through an increase in their monthly bills.

Siderewicz says the $340 million is based on the premise that FirstEnergy’s two plants combined generate 18 million megawatt hours per year. However, he says, Davis-Besse and Perry produce about 15 million megawatt-hours of power annually, well below the estimate FirstEnergy provided. Therefore, Siderewicz says Ohioans would be subsidizing plants based on power that isn’t being produced at both sites.

“It’s bogus and deceitful,” Siderewicz charges. “It’s beyond words, really.”

Moreover, subsidies for FirstEnergy would jeopardize Clean Energy Future’s efforts to construct new, cost-efficient plants across Ohio, Siderewicz says. The Lordstown Energy Center is now under construction, and between 400 and 500 construction workers are at the site building the plant. But plans for a second plant in Lordstown – the Trumbull Energy Center – are in jeopardy should this legislation be enacted, he says.

Siderewicz has lobbied heavily against the bills, just as FirstEnergy has lobbied organizations and legislators to back the subsidies. In a letter to the Western Reserve Building and Construction Trades Council dated April 21, Siderewicz explains that his company’s projects have delivered 4.8 million man-hours of union work to Ohio through the construction of plants in Lordstown, Oregon and Fremont.

In his letter, Siderewicz warns that these subsidies would “throw ice water onto new non-utility investment in Ohio. Such bailout laws send false signals into the marketplace indicating that two new Lordstown-size gas plants are not needed in northeastern Ohio, when in fact they are desperately needed.”

Building Trades President Rocky DiGennaro, also business agent of Local 125 of the Laborers International union, says his organization isn’t about to take sides in this fight, particularly since his tradesmen work for both utility and non-utility entities.

“We’re for all forms of energy development,” DiGennaro says. “Nuclear, natural gas, coal, wind, and solar. We want to work in all of the above.”

Between 400 and 500 tradesmen are on site in Lordstown building the new energy center, DiGennaro says, while another 100 are busy constructing a natural gas pipeline that will run from Dominion’s station in Austintown to the plant in Lordstown. “There’s a lot of work in the Mahoning Valley right now.”

Meanwhile, FirstEnergy says the program is a responsible answer to Ohio’s energy needs and similar to bills passed in New York and Illinois where nuclear plants still operate.

“The Zero Emissions Nuclear Resource Program ensures a strong local economy, a clean environment and a more secure energy future for Ohio,” FirstEnergy President Chuck Jones said in a statement issued April 5.

Jones testified Tuesday before the Ohio House Public Utilities Committee and denied that the utility is seeking a bailout. Instead, he reiterated, the creation of zero emission credits would “appropriately value Ohio’s nuclear plants,” according to press reports.

The David-Besse and Perry plants, Jones said, together produce enough electricity to power 2.8 million households every day and manufacture 90% of Ohio’s carbon-free electricity.

“All energy resources are important to Ohio,” says FirstEnergy spokeswoman Jennifer Young. Should the legislation become law, consumers would see just a 5% increase in their rates, which on average would constitute just $5 per month.

“Sources such as wind and solar have been rewarded for environmental benefits through subsidies, and keeping this diverse portfolio is important,” Young says. “We encourage the development of natural gas in the state, but nuclear needs to remain a part of that.”

State Sen. Sean O’Brien, D-32 Trumbull County, who sits on the Senate Public Utilities Committee, says there’s no schedule yet as to when S.B. 128 would be heard. “It’s still in the preliminary stages and the bill hasn’t been fully vetted yet,” he says.

Although FirstEnergy makes a good argument that nuclear plants hold the equivalent of about two years of fuel at any given time, O’Brien says, petitioning consumers to help subsidize the industry might be asking too much. “I have some concerns with the costs to constituents,” he says.

Not only is Clean Energy investing in new power plants in the region, other non-utilities such as Advanced Power has plans to construct the $1.1 billion South Field Energy plant in Wellsville in Columbiana County.

“That’s about $3 billion worth of investment in our community,” O’Brien says. “It could be very significant.”

O’Brien says that FirstEnergy has lobbied his office and enlisted the help of friendly unions to encourage lawmakers to support the bill. “Our local unions such as the IBEW are in a tough position because they have workers at both utility and non-utility companies,” he says. “They’ve had generations of workers at some of the older plants.”

On the other hand, the abundance of natural gas produced from the Utica shale in Ohio and the Marcellus shale in Pennsylvania helps spur future development of more technologically advanced, gas-powered electrical plants, O’Brien says.

“Gas looks like its going to be around for a long time, and they might build more plants,” he says.

Regardless, O’Brien allows that any bill that calls for a rate increase is going to be a tough sell to the public and, at first pass, the measure has received a lukewarm reception at best.

“It’s still early,” he says, “but it’s my feeling that there’s not a lot of support behind this.”

Pictured: Clean Energy Future’s $890 million Lordstown Energy Center begins to take shape.

Published by The Business Journal, Youngstown, Ohio.