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Conservatives criticize FirstEnergy nuclear bailout bill as ‘corporate welfare’

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Ohio Republicans pushing a bill to subsidize two nuclear plants are finding themselves at odds with conservative groups in the state.

Substitute House Bill 6, which was advanced out of a subcommittee on May 2, would add more than $300 million to customer bills across the state once all its provisions kick in, with the lion’s share going to subsidize FirstEnergy Solutions’ Davis-Besse and Perry nuclear power plants. Other energy suppliers could also get some of those funds, including certain coal plants.

A committee hearing is scheduled for 9 a.m. Tuesday, May 7.

Both the Buckeye Institute and Americans for Prosperity’s Ohio chapter were among dozens of parties who offered testimony to the committee late last month along with clean energy groups, consumer advocates and other opponents.

“[I]n the plain-spoken language most Ohioans prefer to use, HB 6 is corporate welfare,” said Micah Derry, Ohio state director of Americans for Prosperity. “It is cronyism on full display; in other words, a bailout.”

Likewise, research fellow Greg Lawson of the Buckeye Institute called HB 6’s provisions “classic examples of government subsidies being used to prop up declining businesses — the Davis-Besse and Perry nuclear power plants operated by FirstEnergy Solutions.” And while there would be some funds that could be drawn upon by other entities, those monies risk “becoming a glorified slush fund with the real incentive being for companies to find new and creative ways to tap into that fund,” rather than risking their own capital, he added.

Lawson told the Energy News Network that his organization’s opposition differs from that of environmental groups, clean energy companies or other competitors, saying that other organizations have largely focused on how the bill would affect them.

“The Buckeye Institute opposes the idea of taxpayer subsidies irrespective of who benefits from being handed taxpayer dollars to support their business, and we are consistent on this point,” Lawson said.

His organization is also on record opposing Ohio’s renewable portfolio standard, charges for the Ohio Valley Electric Corporation’s 1950s-vintage coal plants, and nuclear subsidy bills from 2017.

“Clearly stated subsidies are bad policy,” he added.

Looking backward?

Environmental advocates make a distinction for the clean energy standards. In their view, the market-based renewable energy standards encourage competition among companies and stimulate growth in that sector, while attracting investments in Ohio. Renewable energy and energy efficiency also place downward pressure on electricity prices, noted Dan Sawmiller, Ohio energy policy director for the Natural Resources Defense Council.

Tim Judson of the Nuclear Information Resource Service said in his testimony that “it would be far more cost-effective and economically beneficial for Ohio to invest in the booming efficiency, wind, and solar industries; and provide support to nuclear workers and host communities throughout the transition to a clean energy economy.” Provisions in the substitute version of HB 6 would still nullify or otherwise render ineffective much of the existing clean energy standards.

The Center for Media and Democracy’s SourceWatch project has noted that both the Buckeye Institute and Americans for Prosperity have ties to brothers Charles and David Koch of Koch Industries, who are known for supporting far-right policy positions.

Conservative groups’ opposition should send an important signal to lawmakers, said Howard Learner, executive director of the Environmental Law & Policy Center.

“The fact that Ohio’s environmental groups, consumer groups and more politically conservative groups are all opposing FirstEnergy Solutions’ proposed nuclear bailout legislation reflects that this is truly bad public policy and an unfair rate hike to consumers,” he said.

“FirstEnergy Solutions is in the U.S. Bankruptcy Court because of its and FirstEnergy’s poor management decisions in the modern, changing electricity market.” Neither the bankruptcy court or other policymakers should bail out FirstEnergy Solutions and force consumers to food the bill, Learner added. “Otherwise there will be a long line of more out-of-market power plant owners with their hands out next.”

Supporters say the bills’ added charges would be partly offset by eliminating charges for the state’s renewable energy and energy efficiency standards. Existing law requires the energy efficiency charges to result in net savings for consumers, however. Thus, Ohio customers actually have an average net savings from the standard of $3.61 per month, according to the Environmental Law & Policy Center and the Ohio Environmental Council Action Fund.

What’s next?

House Bill 6 has been on a fast track since it was introduced on April 12. The House Energy and Natural Resources Committee will take up consideration of the bill next, presumably with an opportunity for parties to submit additional testimony.

“This is a step, a work in progress,” said Rep. Dick Stein, R-Norwalk, as the committee meeting ended, noting that there are still ongoing conversations about the bill.

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Discussions

Bob Meinetz's picture
Bob Meinetz on May 6, 2019

Once again, overwhelming evidence of nuclear's cost-effective, clean operation throws pro-gas and pro-renewables interests into a tizzy. Neither knows how to respond, other than cast anti-nuclear, anti-environmental talking points against the wall hoping something - anything - might stick.

Crafting a logical argument to support the ongoing renewables bailout while denying one to nuclear is apparently more challenging than the groups expected. From Brattle's Impacts of Announced Nuclear Retirements in Ohio and Pennsylvania (April 2018):

"This new analysis estimates that if the four Ohio and Pennsylvania nuclear plants now scheduled for retirement were to continue operating, their output would offset substantial fossil generation from gas and coal plants and thus would:
• Avoid over 21 million metric tons of CO2 emissions annually, equivalent to 4.5 million cars on the roads and potential social costs of $921 million per year.
• Avoid tens of thousands of tons of criteria pollutants annually and potential social costs of $170 million per year.
The total zero-emission generation of these four nuclear plants, and thus the fossil emissions avoided by them, is considerably greater than all solar and wind generation in PJM.
• These four nuclear plants provide 39 million MWh of zero-emission energy each year, while wind and solar generation across PJM provided about 26 million MWh in 2017.
• Retiring these plants would more than reverse the emissions benefits of all the renewable generation in PJM installed over the past 25 years, and the billions of dollars of historical investments that have supported it."

Matt Chester's picture
Matt Chester on May 6, 2019

It's frustrtating to see the weaponization of language here-- yes, this amounts to a nuclear bailout, but if that language was paired with the education on why public support of existing nuclear plants is important then it wouldn't be perceived as so 'nefarious.' I don't expect the general public to understand the science of nuclear energy, but that's why it's important for those in the know to help spread the word

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