Even if you don’t live in Ohio, you may have heard about H.B. 6, the notorious law the Legislature passed in 2019 that slapped Ohio ratepayers with a monthly surcharge to bail out two struggling nuclear plants. Although the nuclear bailout was repealed and refunded in 2021, some of the law’s other egregious provisions requiring ratepayers across the state to subsidize money-losing coal plants and gutting renewable energy and energy efficiency standards are still in place today.
The Union of Concerned Scientists opposed H.B. 6 in 2019 because it was bad for consumers, bad for the economy, and bad for the environment. Despite the partial repeal, H.B. 6 is still driving up Ohioans’ electricity bills—and undermining the state’s prospects for a clean energy future.
Since H.B. 6 went into effect, Ohio ratepayers have paid more than $182 million to subsidize two 67-year-old coal-fired power plants operated by the Ohio Valley Electric Corporation (OVEC). One, the 1080-megawatt (MW) Kyger Creek Power Plant, is located along the Ohio River, just south of Cheshire, Ohio, about 100 miles south of Columbus. The other, the 1,300-megawatt Clifty Creek Power Plant, is in Madison, Indiana, also along the Ohio River some 75 miles southwest of Cincinnati. Even Ohioans whose utilities don’t have a stake in OVEC are subsidizing these uneconomic coal plants.
Besides higher monthly bills, the two 1950s-era coal plants are responsible for significant air and climate pollution as well as toxic coal ash. The Office of the Ohio Consumers’ Counsel estimates that, since H.B. 6 was enacted, the plants have emitted more than 29 million tons of heat-trapping carbon dioxide, 28,000 tons of nitrogen oxides (NOx), and 16,000 tons of sulfur dioxide (SOx). Both NOx and SOx have been linked to asthma and other respiratory diseases, as well as premature death.
Ohioans pay for OVEC losses
OVEC is owned by several utility companies, including AES Ohio, American Electric Power and Duke Energy, which signed expensive contracts for power from the two OVEC plants and pass those costs on to their ratepayers.
Indeed, the OVEC coal plants have been selling electricity for less than it costs to generate for a decade, operating at a loss since 2012. At the same time, an audit of the subsidies found that purchasing energy and capacity from regional wholesale markets is cheaper than power from the OVEC plants. In addition, FirstEnergy—owner of the two uneconomic nuclear power plants H.B. 6 originally bailed out—reported in a 2018 bankruptcy filing that it lost $12 million annually due to its stake in OVEC, and Ohio legislative analysts discovered that Ohio utilities paid $94 million over market prices for OVEC’s electricity in 2018. In addition, OVEC’s coal plants have at times operated when it made no economic sense to do so, further driving up costs and losses.
Instead of providing lower-cost energy, the utilities with a stake in OVEC are using the subsidies to protect their bottom line and their shareholders. The subsidies insulate the utilities from the costs of expensive, uneconomic coal and provide a disincentive for them to invest in cheaper clean energy resources.
The OVEC coal bailouts, which the PUCO approved in 2014, were set to expire in 2024 and only applied to utility customers who had a stake in OVEC. But thanks to H.B. 6, Ohioans who aren’t customers of utilities that own OVEC are now also covering OVEC’s losses. The subsidies were codified and extended to 2030 when H.B. 6 was signed into law by Ohio Gov. Mike DeWine.
According to the Ohio Manufacturers Association, Ohio customers statewide are on target to shell out $1.8 billion in subsidies for the two coal plants by 2030, and maybe more. Shifts in energy markets could drive OVEC losses even higher.
OVEC contributes to high energy burdens
While the country is still dealing with the economic fallout from the ongoing pandemic, inflation, and gas and heating fuel price spikes, covering the losses of dirty, uneconomic coal plants adds to Ohioans’ overstretched financial obligations. According to the American Council for an Energy-Efficient Economy, the median pre-pandemic energy burden was already more than 9 percent for low-income households in Indiana, Illinois, Michigan, Ohio and Wisconsin compared to the median of 3.6 percent for those Midwestern states.
To make matters worse, H.B. 6 also has reduced investment in energy efficiency and renewable energy, both which lower energy costs for households compared to coal-fired power.
The recently enacted bipartisan federal Infrastructure, Investment and Jobs Act expands weatherization assistance, providing $172 million in energy efficiency investments that will lower costs for Ohio ratepayers. That amount, however, is less than what Ohio households have already paid in coal subsidies since January 2020.
As long as Ohio households are burning nearly $80,000 a day on these two coal boondoggles, families struggling to make ends meet will be disproportionately harmed by higher energy burdens and be at higher risk of having their electricity shut off. An analysis by the Center for Biological Diversity and BailoutWatch found that Ohio was one of the top 10 states with the most electric utility disconnections in 2020 and 2021. Utilities in Ohio shut off power to more than 176,000 households during the COVID-19 pandemic.
Ohio regulators need to act
The Ohio utilities that purchase power from OVEC are imprudently buying polluting, expensive electricity—and the H.B. 6 coal subsidies shield them from those costs.
FirstEnergy, the utility that bribed H.B. 6 into existence, still has subsidiaries that are OVEC shareholders and benefit from the subsidy. The PUCO has been slow to hold FirstEnergy accountable for how ratepayer dollars are spent and other issues related to the bribery scheme that gave Ohioans H.B. 6. It also has been slow to move on audits addressing OVEC coal plants’ uneconomic operations and investigating utility decisions to purchase expensive power on the ratepayers’ dime.
A draft 2020 PUCO-commissioned audit found that “keeping the plants running does not seem to be in the best interests of the ratepayers,” but that assertion was missing from the final version at the request of a PUCO staffer who asked the auditors to use a “milder tone.” The PUCO needs to be less concerned with tone and more concerned with holding utilities accountable and ensuring utility consumers are not paying for wasteful spending.
Last November, the Michigan Public Service Commission found that OVEC’s costs exceed the market price of electricity by tens of millions of dollars and warned that American Electric Power’s local utility may not be able to pass all its OVEC losses that are “incurred because of imprudent” decisions onto customers.
Ohio utilities’ overspending on OVEC electricity and relying on coal subsides to defray their losses is driving up costs for ratepayers and stifling competition from lower-cost resources. It’s time that the PUCO stopped letting Ohio utilities use Ohio ratepayers as a piggy bank for their uneconomic spending and poor decision making.
OVEC coal plants need to go, and so does H.B. 6
Ohio should follow the example of other Midwestern states that are shutting down coal plants and replacing them with lower-cost renewables and efficiency. Robust energy efficiency and renewable energy investments would help provide low-cost, pollution-free electricity for Ohioans and create new jobs and economic opportunities at the same time.
The recently passed federal Inflation Reduction Act (IRA) provides significant incentives and funding for cost-saving weatherization, efficiency and renewable energy, with bigger incentives for low-income households. But for Ohioans to be able to take full advantage of the IRA, state lawmakers must completely repeal H.B. 6 to ensure that cheaper, cleaner resources can compete and grow. Removing H.B. 6’s obstacles to a clean energy transition and its subsidies for OVEC’s uneconomic coal plants will help Ohio make the most of this historic moment and get back on track to mitigate climate change, protect public health, and make energy more affordable.
This column is the last one Meghan Hassett wrote as the Union of Concerned Scientists’ Midwest clean energy advocate. She is now the Midwest campaign manager at the Natural Resources Defense Council.