Subsidies proposed for nuclear plants

Foes say consumers will pay more

COLUMBUS — Proposed subsidies to keep two struggling nuclear power plants humming will spike prices for consumers and make northern Ohio less attractive to investment, opponents argued on Tuesday.

However, supporters of House Bill 178 told lawmakers that shuttering the 39-year-old Davis-Besse plant near Oak Harbor and the 30-year-old Perry plant east of Cleveland would kill higher-wage, skilled jobs and threaten public safety.

The Davis-Besse Nuclear Power Station in Oak Harbor is one of FirstEnergy’s nuclear plants in Ohio that has been unable to compete in an electricity market driven by abundant and cheap natural gas.

“An additional charge to electricity prices would create additional costs of manufacturing companies, which would either be borne by its customers or cause companies to sacrifice already thin profit margins as they cannot recover these nonmarket-driven costs,” said Thomas Lause, vice president and treasurer of Cooper Tire & Rubber Co. in Findlay and a board member of the Ohio Manufacturers Association.

“This could also deter new business investment in the state of Ohio as new companies looking to invest may choose to go elsewhere in light of higher electricity costs that are above-market,” he told the House Public Utilities Committee.

FirstEnergy’s nuclear plants have been unable to compete in an electricity market driven by abundant and cheap natural gas, but the firm insists this is not a bailout.

It has said it could be forced to close plants that Ohio should value because they do not directly emit carbon pollution, generate roughly 4,300 direct and indirect jobs, and provide about $25 million annually in state and local taxes.

The Akron-based company says the plants add diversity and reliability to Ohio’s mix of home-grown electricity options.

The bill, sponsored by Rep. Anthony DeVitis (R., Green), and an identical measure in the Senate would allow subsidiary FirstEnergy Solutions, the plants’ direct owner, to collect about $300 million a year from customers, even if they shop elsewhere for their power.

That could total $4.8 billion if extrapolated over the potential 16-year life of the program. It would mean an estimated $5 a month for the typical residential customer.

The subsidies to FirstEnergy Solutions would come in the form of zero-emission nuclear credits. The program, generally patterned after others in New York and Illinois, is supported by unions representing plant workers, local governments, and school districts that benefit from tax revenue.

Among the opponents are electricity marketers and environmental and consumer organizations.

They argue the annual tab could be as high as $535 million if FirstEnergy’s Beaver Valley nuclear plant, just over the Ohio River in Pennsylvania, was found to be eligible. The committee’s chairman, Rep. Bill Seitz (R., Cincinnati), has suggested this would be unlikely because of the general wind direction, Beaver Valley could not claim it is helping Ohio’s air.

Fred Peterson, director of the Ottawa County Emergency Management Agency, said the two plants provide more than $900,000 a year in grants to emergency services in seven surrounding counties, including Ottawa, Lucas, Erie, and Sandusky near Davis-Besse. He said Ottawa’s emergency warning siren exists solely because of Davis-Besse.

He recalled the polar vortex and the frigid temperatures of 2014. FirstEnergy warned him then that it may have to resort to rolling brown-outs if the electric grid wasn’t up to the task.

“That was due to the instability of the grid due to the residential demand for natural gas significantly reducing the availability of natural gas for electricity generation,” Mr. Peterson said. “Fortunately, we were able to avoid the rolling brown-outs, but as an emergency manager, that is a call I do not ever want to be faced with having to receive again.”

The bill’s opponents, however, countered that gas plants are required by the regional grid operator to have long-term contracts for gas supplies locked in to prevent a similar situation.

Bill Siderewicz is president of Clean Energy Future LLC, which is about to undetake gas plant construction in Oregon and Lordstown. The first of two Oregon plants is an 800-megawatt facility, whereas Davis-Besse can produce 900 megawatts of power. A second Oregon plant will generate 955 megawatts.

Mr. Siderewicz said 15 additional plants will be needed in Ohio, representing a capital investment of $17 billion.

“If this [nuclear credit] should go forward, you’ll not just stop these two [Oregon] plants, you’ll have stopped 15,” he said.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.