Coal plant bailouts have cost Ohioans $232M and counting

COLUMBUS — Bailouts of two Cold War-era coal plants, enacted via legislation at the center of a sprawling public corruption scandal, have cost Ohioans statewide $232 million over the last 3.5 years, state records show.

Four men, including a former House speaker, have been convicted and a top regulator last week was indicted in connection with intersecting, multimillion-dollar bribery schemes to pass House Bill 6, the 2019 bill that established the coal bailouts in state law. The subsidies last until 2030, and Republicans who control the statehouse have for years rebuffed efforts to repeal them.

Three companies that partially own the Ohio Valley Electric Company – which operates one coal plant in Southeast Ohio and another in Southeast Indiana – continue to receive millions of dollars every month funded by an additional charge to Ohioans on their electricity bills. The money flows through OVEC to American Electric Power, AES Ohio, and Duke Energy.

The ranking Republicans who oversee supermajorities in both chambers of the Ohio General Assembly have signaled the OVEC subsidies aren’t going anywhere.

HB6 forced ratepayers to cover two separate subsidies. One, worth more than $1 billion over its lifetime, went to nuclear plants owned by a FirstEnergy subsidiary and became the main focal point of the FBI’s investigation. FirstEnergy admitted to paying bribes in exchange for the legislation, and the subsequent criminal investigation already has ensnared four. Sam Randazzo, the former chairman of the Public Utilities Commission of Ohio, also was indicted last week on allegations he took $4.3 million in bribes from FirstEnergy.

But the bill also forced every Ohioan in the state to cover the utilities’ losses on the two coal plants.

In the first half of this year, Ohioans paid $73 million to utilities for OVEC’s losses, according to PUCO data. The total tab is $232 million since Jan. 1, 2020. The plants were only briefly profitable, turning the ratepayer charge into a modest credit, in early to mid2022, when the Russian invasion of Ukraine dramatically destabilized energy markets.

In December 2020, amid public outcry after the arrest of ex-Ohio House Speaker Larry Householder coupled with a new federal rule that disincentivized certain power companies from taking state subsidies, state lawmakers repealed the nuclear subsidy for FirstEnergy before it took effect. The OVEC bailout, however, lives on.

The subsidies existed before HB6 in narrower forms via rulings from the Public Utilities Commission of Ohio. That charge also would have expired between 2023 and 2025, depending on the utility. HB6 guaranteed those payments in law and forced all customers – including those of FirstEnergy, which doesn’t own stake in OVEC – to chip in.

Including the ratepayer charge of the preexisting OVEC subsidies ($155 million), the total cost for Ohio ratepayers to OVEC will be $845 million by 2030. That’s according to RunnerStone, a consulting firm that analyzed PUCO and other data for the Ohio Manufacturers’ Association, a critic of HB6.

OVEC’s supporters often play up its atomic roots. The plants launched in 1952 to power uranium enrichment facilities of the federal Atomic Energy Commission. That agreement with what’s now the Department of Energy expired in 2005.

Cleveland.com and The Plain Dealer reached out to the three utility recipients of the OVEC subsidies to ask what benefits the bailouts deliver for customers and whether the companies support repeal in light of the latest HB6-related indictment. Only AEP, which owns by far the largest financial stake in OVEC, responded.

In a statement, AEP spokesman Scott Blake noted that there “have been periods” where customers have benefitted from the OVEC plants, receiving a bill credit instead of a charge. He said customers have benefitted thanks to affordable electricity and good jobs from the plant. He distanced the company from any criminal acts to pass the bill.

“After AEP learned of the criminal allegations against the Ohio legislator and others relating to HB 6, AEP, with assistance from outside advisors, conducted a review of the circumstances surrounding the passage of the bill,” he said. “Management does not believe that AEP was involved in any wrongful conduct in connection with the passage of HB 6.”

Politics

Since their inception, the OVEC subsidies have proved politically sticky.

Early versions of HB6 subsidized nuclear but not coal. The non-FirstEnergy utilities that own OVEC only put their political muscle behind the controversial bill when House Republicans added in the OVEC bailouts. Tax records would later show that AEP – the largest equity holder in OVEC – contributed $700,000 through a passthrough organization to the nonprofit Householder was convicted of using as a bribe vehicle with FirstEnergy.

AEP has not been criminally accused of any wrongdoing. However, civil lawsuits against the company are still active in federal court. And the U.S. Securities and Exchange Commission has issued two subpoenas to the company seeking documents related to the passage of HB6. The company in financial filings reports it is not expecting any related material loss.

In the years since Householder’s arrest, political efforts to repeal HB6 have gone nowhere.

After Householder’s conviction in March, current House Speaker Jason Stephens, a Kitts Hill Republican, said the House isn’t planning any repeal. He called the plants beneficial to the state and the power grid. One of the plants, the Kyger Creek Power Plant, provides jobs in his district. He didn’t respond to an inquiry last week.

Senate President Matt Huffman, a Lima Republican, has said he doesn’t support any repeal. His spokesman said this is still true after Randazzo’s indictment.

Perennial talk of a bipartisan procedural maneuver to force a vote to repeal the OVEC bailouts hasn’t materialized. Rep. Casey Weinstein, a House Democrat who for years has pushed a full repeal HB6, still calls the OVEC subsidies a “corruption tax” but acknowledges the needle hasn’t budged.

“There is bipartisan support for that, but there is not enough,” he said. “We have not reached a critical mass enough to move it.”

Rep. Derek Merrin, a Republican who has voiced support for OVEC’s repeal in the past, didn’t respond to a text message.

The Ohio Consumers’ Counsel, an independent state watchdog agency representing interests of residential ratepayers, has spent years fighting the OVEC bailouts. They call the payments a “double whammy” of corruption costing Ohioans money every month and rampant pollution from aging, dirty plants.

“The indictment of former chair PUCO Randazzo should mean justice for consumers is one step closer,” said Maureen Willis, who directs the agency. “But much more is needed. Legislative efforts repealing the HB 6 subsidies charged to consumers should be restarted, not left in legislative limbo. And reform is needed of the PUCO selection process that led to former Chair Randazzo’s appointment. That would be a good start toward achieving some measure of justice for consumers.”