Nuclear Costs
Estimates for new reactor construction costs continue to sky-rocket. Conservative estimates range between $6 and $12 billion per reactor but Standard & Poor's predicts a continued rise. The nuclear power industry is lobbying for heavy federal subsidization including unlimited loan guarantees but the Congressional Budget Office predicts the risk of default will be well over 50 percent, leaving taxpayers to foot the bill. Beyond Nuclear opposes taxpayer and ratepayer subsidies for the nuclear energy industry.
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July 18, 2019Everything about the FirstEnergy bailout is wrong
Blog by Environmental Defense Fund (EDF), long time opponent to bailing out Ohio's nuclear and coal plants:
FirstEnergy’s bailout campaign is filled with all kinds of wrong. Please let a failed HB 6 be the end of it.
By John Finnigan / Bio / Published: July 16, 2019
Since it was first filed in the Ohio legislature, HB 6 has been pitched as a necessary savior for a struggling Ohio utility and employer. FirstEnergy Solutions’ nuclear plants are losing money, the sales pitch goes, and the publicly-traded company needs $150 million a year by June 30 or it will shut down the plants and Ohio will lose 4,000 jobs.
Let me suggest that everything about this is wrong.
The June 30 deadline was wrong
We know now that the June 30 deadline was wrong because, well, it’s after June 30. When the deadline passed, FirstEnergy told reportersthat it will proceed with taking steps to shut down the plants, but it can reverse course at a later date. Perhaps FirstEnergy’s leadership knew it was a false deadline, like the many other times the company cried wolf.
The 4,000 jobs is wrong
In his June 11 testimony, Ohio Rep. Jamie Callendar said that 4,000 jobs were at risk. FirstEnergy’s Lindsay Humble put the number at 4,300 jobs. Yet Charles Moore, the FirstEnergy restructuring manager for the bankruptcy reorganization, testified that the entire FirstEnergy Solutions company employs 2,700 persons, which includes operations unrelated to the nuclear plants, such as their retail marketing business. FirstEnergy Solutions has published fact sheets showing that Davis-Bessie has 720 employees and Perry has 760 employees — a total of 1,480 employees at the nuclear plants.
Even if we’re generous with the number — let’s say 2,200 jobs — a $150 million per year bailout is a bad investment of taxpayer money.
The legislature would be much better off giving the funding to JobsOhio, the non-profit corporation that uses state liquor funds to do economic development in Ohio. According to a McKinsey analysis of JobsOhio’s track record, the corporation paid out $1 billion in economic development incentives between 2013 and 2017 that created or retained a total of about 154,000 jobs – an average of $6,500 in incentives per job. That would be a much better use of taxpayer money than a free handout to FirstEnergy Solutions.
Giving taxpayer money to a profitable, publicly traded company is wrong
HB 6 is a $150 million handout to FirstEnergy Solutions to keep its two nuclear plants open. Why should FirstEnergy Solutions receive any free handouts? In his June 29 testimony, Michael Haugh of the Ohio Consumers’ Counsel showed that the two nuclear units earned a combined profit of $50 million since the company filed for bankruptcy.
FirstEnergy Solutions’ ongoing bankruptcy case will likely discharge all of the company’s debt, which will make it even more profitable in the future. The company recently gave the Bankruptcy Court a financial projection for the five-year period of 2019-2023, showing expected earnings before taxes, depreciation and amortization of nearly $1 billion. Does a business that earned $50 million in profits last year and expects $1 billion in earnings over 5 years deserve a free handout of $150 million per year?
The $150 million per year is wrong
The $150 million per year that FirstEnergy claims it needs to keep the nuclear plants open is wrong. More to the point, FirstEnergy’s financial projections regarding the nuclear plants have always been wrong. When FirstEnergy initially requested a bailout at the PUCO in 2014, it claimed the plants would provide an annual profit of $107 million beginning in 2019, that the plants would continue to be profitable through 2031, and that the plants would have a net profit of $2 billion through 2031.
In February 2016, FirstEnergy claimed the plants would generate a net profit of $561 million from 2016 to 2024. Five months later, FirstEnergy changed course and asked for an annual $561 million subsidy for eight years. Then, in June 2016 testimony, FirstEnergy stated that it needed an annual subsidy of $150 million. Like the artificial, June 30, 2019, shutdown deadline, FirstEnergy has been all over the map regarding the plants’ financial performance and the amount of a bailout needed.
Dr. Paul M. Sotkiewicz of E-Cubed filed testimony last month on behalf of the American Petroleum Institute stating that, over the next 10 years, Davis-Besse is expected to earn $280 million and Perry is expected to earn $440 million. He based his opinion on a detailed analysis of all of the costs (fuel costs, capital costs and O&M) and the projected wholesale energy market prices, and he provided the sources for all of his data, which he submitted for this Committee’s review and inspection.
On the other hand, FirstEnergy submitted the testimony of Charles Moore, who is managing the FirstEnergy Solutions restructuring process. Moore said the plants needed $150 million/year to remain open, but he did not submit any proof or data to back up his opinion.
Who should Ohioans believe, Dr. Sotkiewicz’s well-reasoned analysis, or Mr. Moore’s unsupported, paid opinion?
Just like so much of FirstEnergy’s bailout campaign, HB 6 is wrong.
HB 6 is not a fix for any real Ohio problem. It’s not a critical job saver. It won’t keep the state’s electric grid from crumbling. And it won’t “clean the air,” as the bill’s Orwellian name suggests it would.
Just like so many threats, statistics and dates FirstEnergy has promoted in pursuit of its billion dollar bailout, HB 6 is wrong.
As Harry Truman said: “The buck stops here.” Let’s hope that FirstEnergy’s bailout campaign will finally stop with the failure of HB 6.
Analysis by Sierra Club of Ohio State House Bill 6 Substitute [bails out nuclear and coal, guts renewables and efficiency]
Hello all, In terms of timing, Chairman Wilson stated in committee it is his intention to bring HB6 up for a vote on Wednesday. Subsequently, his office sent out a committee announcement for Wednesday noting additional amendments for HB6 but no public testimony or vote. It’s not clear what that difference in statement vs announcement means. From my reading, this is the Senate trying to get closer to a place where the House will just concur with the Senate’s changes instead of going to conference committee. It also seems likely Gov. DeWine will sign whatever the legislature sends him provided it includes support for the nuke plants. Our time on this right now seems very short. As you will see below, there are a number of points of major concern to make calls about. Please read through the info below and let me know what questions you have. Changes to HB6 subtracts industrial load from the baseline (about ⅓ of Ohio’s total load is industrial) Requires no maintenance level “tail” or “every year thereafter” language after 2026 - means come 2027, there would be NO renewable requirement for Ohio Also eliminates the .5% solar carve-out—taking the solar requirement to zero in 2020. This could have a major impact on small solar developers in Ohio EERS: Basically killed By February 1, 2021, PUCO must determine all cumulative energy savings collectively achieved since 2009 by all utilities as of December 31, 2020. If savings is at last 17.5% of the baseline, full compliance with EE benchmarks “shall be deemed to have been achieved.” Need to confirm but likely all utilities have hit 17.5% already so this effectively ends the efficiency standard OVEC: Bailed out to 2030 Grants cost recovery for OVEC through nonbypassable rider on ALL regulated customer bills through 2030 This would replace the current PUCO approved PPAs for AEP, Duke, DP&L Would include FirstEnergy regulated customers even though they are not part of the OVEC contract - FirstEnergy Solutions is the contract holder. Very unclear how this would work: “The commission shall determine the manner in which charges collected under this section by a utility with no ownership interest in a legacy generation resource shall be remitted to the utilities with such ownership interests” PUCO conducts “prudence and reasonableness” review every three years. Customer cap of $1.50 for residential customers, $1,500 for industrial customers, and gives PUCO authority to determine customer caps for other classes Any costs in excess of the caps would be banked to be collected later Nuke plants: Bailed out till 2026 Allocates $150 million from the “Energy Generation Fund” to nuclear annually through 2026. $0.85 / month residential $2,400 / month for industrial customers exceeding 45 million KWh at single location. For nonresidential customers that do not exceed 45 million KWh, “the level and design of the charge or charges shall be established in a manner that avoids abrupt or excessive total net electric bill impacts for typical customers.” Audit of FES bailout will not start till 2022 Solar support: New $20 million fund Allocates $20mm from the Energy Generation Fund to utility scale solar sited before June 1, 2019 (this is most of the currently planned solar in SW Ohio). Other renewable energy resources ineligible for funding.
Below is an update on the changes that were made to HB6 during the Senate EPU hearing today. Overall, the bill is considerably worse. Of particular concern are the changes to OVEC.
RPS: Maintains a (reduced) RPS from 12.5% to 8.5% of smaller load by 2026
Ohio Campaign Representative
Columbus, Oh 43215
Office: 614-484-7033
Cell: 330-730-5109
Ohio State Senate Energy and Public Utilities (EPU) Committee Hearing and Possible Vote on HB6 Today
(The word is that the Ohio State Senate is trying to match the Ohio State House version, to avoid a joint conference committee review. The bill -- Substitute HB6, the nuclear/coal bailout bill that would gut renewables and efficiency -- is very likely to pass out of the Ohio State Senate EPU Committee today, or in the days ahead.)
http://www.ohiosenate.gov/committees/energy-and-public-utilities/document-archive
ENERGY AND PUBLIC UTILITIES (EPU) COMMITTEE NOTICE
To: Members of the Energy and Public Utilities Committee
From: Steve Wilson, Chair
Date: July 15, 2019
Wednesday, July 17, 2019
9:00 AM
Finance Hearing Room
AGENDA
Sub. H. B. No. 6*
Callender, Wilkin
Creates Ohio Clean Air Program 10th Hearing,
(Possible Amendments)
*Possible vote
HB6 updated target call sheet and sample script
Provided by Becca Pollard of Sierra Club (contact info. below)
Becca's explanatory note:
Becca Pollard
Ohio Associate Organizing Representative
Sierra Club, Beyond Coal
503-756-2598
Oppose Nuclear & Coal Bailouts and Renewable Energy and Efficiency Rollbacks at the Ohio Statehouse
Sample Script
Hi, my name is _______________________ and I’m calling because I’m concerned about House Bill 6. This bill creates a new energy tax on all Ohio electric customers to bail out uneconomic coal and nuclear plants - including a plant not even in Ohio!, I am also concerned with how HB 6 guts our renewable energy and energy efficiency standards. These standards reduce energy waste, save us money and are helping Ohio to transition to clean, affordable renewable energy.
I want [Senator/Representative] _______________ to take a stand for future generations of Ohioans and oppose this bill and instead support legislation that will help to grow renewable energy like wind and solar that will truly make our air cleaner.
Please ask _____________________ to vote NO on HB 6.
Senate Target list:
Tier 1:
Brenner (614) 466-8086
Craig (614) 466-5131
Fedor (614) 466-5204
Gavarone (614) 466-8060
Hackett (614) 466-3780
S. Huffman (614) 466-6247
Lehner (614) 466-4538
N. Manning (614) 644-7613
Schaffer (614) 466-8076
Sykes(614) 466-7041
Tier 2:
Antonio (614) 466-5123
O’Brien (D) (614) 466-7182
Maharath (614) 466-8064
Roegner (614) 466-4823
Terhar (614) 466-8068
Wilson (614) 466-9737
Uecker (614) 466-8082