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Ohio’s Grand Bargain on Energy Policy

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Ohio lawmakers are expected to begin circulating language soon for a bill aimed at bailing out—Davis Besse and Perry—two nuclear power plants that sit along Lake Erie on Ohio’s north shore. But as we await the bill’s language, “compromise” and “bi-partisanship” have become contagious words around Columbus. A stand-alone nuclear bailout bill would presumably have little support—and indeed, would not count NRDC amongst its supporters—but is a grand bargain in the works?

Ohio’s First Attempt

It is important to emphasize that this would not be the state’s first attempt to throw a lifeline to two economically-struggling plants. At the request of FirstEnergy, multiple pieces of legislation were drafted in the 2017-2018 session of the Ohio General Assembly to develop a Zero Emission Nuclear (ZEN) bailout for the state. The ZEN was pitched as a close cousin to Illinois’ Zero Emissions Credit program that was part of the omnibus Future Energy Jobs Act package (spoiler alert: it was not) and would have assigned a dollar value to electricity generated by nuclear reactors that do not emit carbon dioxide and other pollutants. While the legislation did not pass in the last session, it is anticipated that a new bill (and maybe more than one) will soon be introduced in the current General Assembly, with discussions likely to begin in the Ohio House.

As evidenced by last session’s bill title and recent conversations in House Committee meetings, the proponents of bailing out these two plants consistently point to the benefits of clean, or carbon-free energy as support for placing the economic future of the plants on the backs of Ohio’s electricity customers. It certainly is time for Ohio to invest in a clean energy future with long-term solutions for our state. But preserving nuclear units should not be the leading strategy for decarbonizing a state’s electricity production. To the contrary, when considering aid to nuclear facilities—particularly aid that is borne by electricity customers—policy makers should be focused on developing a broader package of long-term solutions that would enable the state to benefit from the jobs, lower electric bills, and improved air and water quality made possible by a cleaner energy economy. Examples of such a package of policies includes caps on carbon, mechanisms to drive ambitious levels of investment in energy efficiency and renewable energy, assuring best practices for the management of the radioactive nuclear waste and support for the workers and local communities.

Thankfully, Ohio does not have to reinvent the wheel to get this right; we are not the first state housing nuclear energy generation to address a long-term energy transition plan. Experience in five states grappling with the potential closure of nuclear plants—CaliforniaNew York, IllinoisConnecticut, and New Jersey—demonstrates that any financial support must be narrowly tailored, be founded in a showing of financial distress, include a firm phase-out date, and contemplate a broader carbon-free policy package that allows for an orderly transition toward more sustainable clean energy resources.

There are lots of rumors flying around Columbus about what a potential bill could look like, the worst of which include bailouts for coal-burning power plants as part of the discussion. I encourage you to closely read NRDC’s nuclear issue brief for more information on how to ensure a well-planned, systematic transition away from uneconomical nuclear power plants. In the meantime, here’s a closer look at Illinois as Ohio’s close neighbor to the west.   

The Illinois Experience

In December 2016, the Illinois General Assembly passed the Future Energy Jobs Act(FEJA). The legislation includes direct financial support for the Clinton Nuclear Generating Station and Quad Cities Nuclear Generating Station in the form of zero-emission credits, but that support is narrowly tailored. It was issued in the form of a 10-year contract, and was contingent on a showing by Exelon, the plants’ owner, that the facilities were no longer economically viable. Exelon had previously filed notice with the Illinois Public Utility Commission of its intent to shutter the facilities. Analysis also showed that absent this legislative package, increased generation from coal and natural gas facilities would have been required to meet the electricity demand served by the nuclear plants.

Critically, Illinois’s decision to provide financial support for these nuclear plants was made in the context of a state clean energy policy badly in need of reform. The state had been a clean energy leader, having built the second-largest number of wind turbines in the nation by 2012. But in the intervening years prior to passage of the FEJA, wind development in the state had ground to a halt due to structural issues with its the Renewable Portfolio Standard that prevented the procurement of renewables through long-term contracts. Similarly, the state’s Energy Efficiency Portfolio Standard had been failing to achieve its original policy goals by a wide margin, in large part due to a cost cap that limited utilities’ spending even if additional investments would have been cost-effective, saving customers money. 

The 2016 legislation remedied these flaws in the state’s clean energy policies, and with implementation now underway Illinois is set to be a leader in energy efficiency programming, in utility-scale renewable energy development, and—thanks to the Illinois Solar For All and Community Solar programs—in providing local communities and low-income populations equal access to the benefits of clean energy.

But Illinois did not stop there.  Illinois lawmakers recently introduced the Clean Energy Jobs Act that would make the state a leader in clean energy and climate action by: accelerating the state RPS to reach 45% renewable energy generation by 2030; putting the state on the path to reach 100% renewable energy by 2050; expanding the existing region-leading energy efficiency program; and including an even broader package of policies to cut carbon emissions from the power sector, electrify the transportation sector, and create economic development and transition programs that help enable the new clean energy economy.

Transitioning Ohio’s Clean Energy Policy

The policy advances of Ohio’s friends and neighbors in other states are instructive. Adopting a pro-growth clean energy vision creates more well-paying jobs, attracts investment, and fosters innovation. There are over 108,000 Ohio jobs in various clean energy fields. Countless more clean energy jobs can be created, but only if Ohio adopts policies that spur growth in wind and solar, and in programs that make our homes and businesses more energy efficient. And I should mention, strong clean energy policies play well with voters.

In these other states, like Illinois and New York, the main thrust of subsidizing existing nuclear plants was to allow the time necessary to develop a plan for an orderly transition to clean energy. In each of these states, there is a defined end to the transition period (2030 in New York, and 10-year contracts in Illinois). There is no public policy justification for indefinite financial support.

Ohio will be left behind our neighboring states throughout the Midwest if we do not have strong policies for a transition to the clean energy economy. We should be leading, not swimming against the economic wave that is lifting up other states; and not protecting Wall Street speculators but investing in local renewable energy generation and all the benefits for Ohio that would come with it.  

NRDC Expert Blog by Daniel Sawmiller

Republished with permission from the Natural Resources Defense Council's expert blogs.

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