Government

Op-Ed: PUCO Should Short Circuit Utility Handouts

By Todd A. Snitchler, former PUCO chairman and spokesman for the Alliance for Energy Choice

CLEVELAND – If FirstEnergy gets its way with the Public Utilities Commission of Ohio, just about every customer within its service area will pay more for electricity over the next eight years. That’s because FirstEnergy has a request before the PUCO to charge customers an added fee to subsidize electricity generated by the Davis-Besse nuclear plant in Ottawa County and the Sammis coal-fired plant in Jefferson County.

FirstEnergy says it can’t make sufficient profits on electricity generated at these facilities, so it wants the PUCO to guarantee above-market rates plus a 10.38 percent profit for power generated at these plants. This is a blatant attempt to shift the costs and risks away from shareholders and onto the backs of customers.

This would cost the average household $800 more over the next eight years, according to the Ohio Consumers’ Counsel. Depending on consumption, industrial users would pay anywhere from $29,410 to $29.4 million more, according to the Ohio Manufacturers’ Association. That’s a lot of money.

FirstEnergy has argued that, without customer subsidies, these plants will be forced to close, threatening the reliability of electricity for its customers. But that’s a bogus claim. FirstEnergy received $1.1 billion in September from the PJM capacity auction to keep these plants open for at least three years. (PJM is the organization responsible for coordinating the regional electric grid.)

In reality, FirstEnergy wants these subsidies because it can’t compete with other companies that have entered the Ohio market. As the Business Journal recently reported, several new power-generation projects are being developed in the Mahoning Valley and across the state.

Clean Energy Future LLC is building an $850 million natural gas power plant in Lordstown and, according to The Business Journal, is considering building another plant when this one is complete. Other new plants are planned in Trumbull, Columbiana, Carroll, Lucas and Warren counties. Collectively, they represent more than $2 billion of investment, significant new jobs and tax benefits. All told, these plants will produce enough electricity to power nearly 3.9 million homes.

There is no doubt FirstEnergy’s proposal would have a chilling effect on investment in new energy sources. Why would another company invest hundreds of millions of dollars to build a clean, modern plant in Ohio if ratepayers are forced to subsidize a competitor’s older, inefficient plants? Those investments will move to other states.

It’s not surprising that FirstEnergy would oppose other companies investing in Ohio and threatening their profits. But competition is good for residents and business owners. It means lower energy costs and more money left in their pockets.

This is no time to be stifling competition. Ohio needs the investment and consumers want to control their electricity costs. We encourage consumers to visit fightthehikes.com to learn more about this issue and take action.

The PUCO’s mission is “to assure all residential and business consumers access to adequate, safe and reliable utility services at fair prices, while facilitating an environment that provides competitive choices.” The PUCO should pull the plug on utility handouts.

The author, Former Ohio PUCO chairman Todd Snitchler, is a principal at Vorys Advisors LLC and serves as spokesperson for the Alliance for Energy Choice, an Ohio nonprofit corporation that promotes fairness and competition among electric utilities. Alliance members include Advanced Power, Calpine, Dynegy, Energy Professionals of Ohio, NRG Energy, PSEG Energy Resources & Trade, Retail Energy Supply Association, and Talen Energy. More information is available at fightthehikes.com.

Published by The Business Journal, Youngstown, Ohio.