Dive Brief:
- Ohio Republicans are reportedly circulating legislation that would provide financial support to FirstEnergy’s two nuclear plants slated for closure in the state.
- A draft version of the bill would create an "Ohio clean air program" that would provide a total of $300 million annually to the Davis-Besse and Perry nuclear plants through customer bill surcharges. Energy News Network released a version of the bill last Thursday.
- A bill sponsor told Cleveland.com the bill could be formally introduced late this week but its provisions are "still in a state of flux." Lawmakers must pass support legislation by June, when FirstEnergy must decide whether to purchase more fuel for the plants or shut them down.
Dive Insight:
The Ohio draft legislation is the latest in a string of state efforts to preserve retiring nuclear generation in the face of inaction from the federal government.
New York, Illinois, New Jersey and Connecticut have all approved nuclear supports in recent years and Pennsylvania is considering similar legislation.
As in those states, the Ohio bill would create a clean energy program that would reward nuclear plants for their carbon-free generation. Residential customers would pay a $2.50 monthly surcharge to support the plants, while commercial customers would pay $20 and industrial customers $250.
The draft bill does not mention nuclear by name, but its provisions are tailored to apply only to the FirstEnergy nuclear plants in the state. To qualify for the program, a carbon-free generator would need to "exclusively" obtain its compensation from wholesale electricity markets and not receive other state subsidies.
In addition to the nuclear surcharge, the bill would eliminate energy efficiency surcharges that Ohio customers pay today. Industrial customers can currently opt out of those charges, but any customer wishing to support the programs under this bill would have to submit a written application to opt back in.
The bill also includes a provision that anticipates potential changes to the PJM electricity market that covers Ohio and a dozen other states. The Federal Energy Regulatory Commission is currently reviewing a proposal that would allow states to source a portion of their generation capacity through state public policies, rather than the wholesale capacity market.
Under the PJM proposal, subsidized nuclear plants would have to opt out of the grid operator’s capacity market, allowing only unsubsidized generators to compete. If it is approved, the bill would direct Ohio utility regulators to "promptly review the proposal" and issue a report to lawmakers on how to structure Ohio’s participation.
If support legislation is not passed, FirstEnergy plans to close the 908 MW Davis-Besse plant in 2020 and the 1,268 MW Perry Nuclear plant in 2021, along with the 1,872 MW Beaver Valley plant in Pennsylvania.
FirstEnergy says the plants are uncompetitive against cheap natural gas and renewable energy in the PJM market and last year petitioned the federal government for emergency support to keep the plants online.
FERC rejected the Trump administration’s first attempt to support struggling coal and nuclear generators in early 2018, and though President Donald Trump later ordered the Department of Energy to come up with an alternative support program for the plants, none have been announced.
Liabilities associated with its coal and nuclear units last year pushed FirstEnergy Solutions, the generation arm of the holding company, into bankruptcy protection. Last week, a bankruptcy judge rejected the company’s reorganization plan, which would have seen it walk away from cleanup obligations associated with the plants.
Ohio lawmakers would have to work fast to approve a bill before FirstEnergy’s June refueling deadline. Previous efforts to support the plants failed in the legislature, but the introduction of this bill would be the first attempt under new Ohio House Speaker Larry Householder, R, who has been a vocal proponent of nuclear subsidies in the past.
