The News Herald (Willoughby, OH)
Revenue sought to cover plant costs
Focus on whether to subsidize Ohio’s two nuclear power plants returns to the state level.
With federal regulators earlier this month rejecting U.S. Energy Secretary Rick Perry’s proposal to bolster baseload power generators, focus on whether to subsidize Ohio’s two nuclear power plants returns to the state level.
Proponents of Senate Bill 128 spoke before the Ohio Senate’s Public Utilities Committee Jan. 25.
Under the current form of the legislation, FirstEnergy’s residential customers would pay $2.50 extra a month and business customers would pay the lesser of a $3,500 or 5 percent monthly increase.
FirstEnergy is looking to either sell or close the two plants, including the Perry Nuclear Plant in North Perry as it seeks to exit the competitive energy generation business. The moneylosing plants are struggling to compete with cheaper natural gas.
This week, FirstEnergy Solutions, the subsidiary that owns the two plants, had its rating downgraded to a “probability of default” by Moody’s Investor Services.
Sam Belcher, chief nuclear officer for FirstEnergy Nuclear Operating Company, was among those who spoke before the committee Jan. 25.
He said the problem isn’t due from outdated technology making the plants unable to compete. Instead, he blamed a “federal competitive market design that only places value on shortterm costs and ignores attributes such as environmental impact, fuel security and grid resiliency.”
“The challenges facing our plants is a top line issue — they simply do not generate the revenue necessary to cover the expenses associated with safely operating the facilities,” Belcher said. “That’s not a result of an inflated or unusually high operating cost structure in FENOC’s nuclear fleet. We routinely benchmark our industry peers and have found we rank among the top 25 percent when it comes to controlling costs.”
Ottawa County Commissioner Mark Stahl also spoke in favor of the legislation. He along with Lake County Commissioner Jerry Cirino have previously made trips to Washington to speak with officials like Perry and then-acting Federal Energy Regulatory Commission Chairman Neil Chatterjee to discuss the effect the closing of the plants would have on their communities.
Stahl said he could not understate the economic impact the Davis Besse plant has on his county.
“This facility is supported by dedicated and brilliant men and women that provide an economic engine to our region,” he said. This community partner provides thousands of jobs at the generating facility and throughout their supply chains as well as shops, restaurants, entertainment venues and other businesses that comprise the communities around the plant. Local schools, police and fire departments and vital community services rely heavily on tax revenues paid by this plant.”
He said the closing of the plant would be devastating.
“We are already grappling to address the significant reduction in tax revenue resulting from the recent devaluation of the plant, Stahl said. “Closure would mean we have an even bigger gap to fill”
Lake County also saw a recent devaluation of the plant. Last year, FirstEnergy’s public utilities property in Lake County was devalued by nearly $53 million. FirstEnergy’s public utilities property in the county also includes the coal power plant in Eastlake, which closed in 2015.
Perry Schools sees the most significant loss of tax revenues from the devaluation at nearly $2.3 million. Among other entities, the Lake County Board of Developmental Disabilities loses $258,350, the Perry Fire District loses $334,681 and Eastlake loses $200,673.
The other two proponents who spoke at the Jan. 25 hearing were powermarket analysts retained by FirstEnergy.
Henry Chao of Quanata Technology said natural gas delivery construction is “actually aging and inadequate in this country.”
“Upgrading the existing infrastructure and building new capacity are costly and a lengthy process,” Chao said. “There are often serious roadblocks in getting pipeline infrastructure put into place. State and local permitting, environmental regulations, and intrastate/ interstate jurisdictional debates have all caused projects to be delayed. It could easily require upwards of a billion dollars and up to 10 years to permit and build a major gas pipeline.”
Following the hearing, the American Petroleum Institute of Ohio shot back at the claims made at the hearing. API represents the gas and oil industries.
“Enough is enough,” API Ohio Executive Director Chris Zeigler said in a statement. “FirstEnergy is spreading misleading information to Ohioans about the benefits of natural gas in order to distract from the fact that they want Ohio families to bail out their corporation for bad business decisions. Hardworking Ohioans shouldn’t have to foot the bill for corporate failures and voters across the state reject the misguided, half-baked legislative efforts to bail out FirstEnergy.”