Ohio utilities are still backing candidates or lobbying for legislative actions that could subsidize fossil fuels or slow the growth of renewable energy, according to their latest filings.

Ohio’s energy companies have long been active in the political arena. And while non-election years tend to involve much lower levels of campaign contributions, lobbying nonetheless continues on multiple fronts.

Earlier this year, FirstEnergy President and CEO Steve Strah announced that the company’s “approach to political and legislative engagement and advocacy … will be much more limited than it has been in the past,” and that there would be “additional oversight and significantly more robust disclosure.”

Indeed, spending by the FirstEnergy Corp. Political Action Committee this year actually shows up as a negative number on Federal Election Commission filings. From January through May, FirstEnergy’s PAC voided multiple campaign donation checks from 2020. The committee’s campaign donations drew heightened attention last year after the federal government released its complaint alleging corruption at the heart of Ohio’s nuclear and coal bailout law, House Bill 6.

Nonetheless, FirstEnergy reported spending half a million dollars on congressional lobbying during the third quarter of 2021. And its year-to-date filings through Sept. 30 reveal congressional lobbying spending of roughly $1.5 million.

In many ways, FirstEnergy is still clinging to “the way they did business 50 years ago,“ said Ashley Brown, a former Ohio public utilities commissioner who now heads the Harvard Electricity Policy Group. “That’s part of why they’re just a lobbying firm with a utility sideline.”

“The reported expenses [for congressional lobbying] include a variety of items, including salaries for FirstEnergy employees that are registered lobbyists, leases for company offices in Washington, expenditures for outside firms and travel,” said company spokesperson Mark Durbin.

FirstEnergy’s lobbying is especially significant this year “because the company made a big deal about how it has dialed back its political spending, including a freeze on PAC contributions, in response to the U.S. Department of Justice’s bribery investigation,” said Dave Anderson, policy and communications manager for the Energy & Policy Institute.

So far, FirstEnergy’s congressional lobbying spending for 2021 appears to be on track with the $1.9 million spent for congressional lobbying in 2020 and the $1.8 million spent in 2019.

Amounts reported by FirstEnergy from 2011 through 2018 ranged from roughly $1.8 million to $2.8 million per year. Those numbers don’t reflect amounts reported by outside companies for FirstEnergy, in case the amounts had already been counted in FirstEnergy’s own reports.

Other utilities’ spending

While FirstEnergy’s PAC has dialed back campaign donations this year, political action committees for American Electric Power, Duke Energy and AES have donated to some Ohio candidates’ campaigns, albeit at much lower levels than would be expected in a major election year.

Filings for the Dayton Power and Light Company Responsible Citizenship Fund through June showed spending of $1,000 each on campaign funds for 10 Ohio lawmakers, all Republicans. Among them are Ohio Senate Energy and Public Utilities Committee members Rob McColley, Bill Reineke, Matt Dolan, Bob Peterson and Jerry Cirino. McColley and Reineke were primary sponsors of Senate Bill 52, which erects new siting hurdles for solar and wind projects.
Campaigns for Ohio Senate President Matt Huffman and his cousin, Agriculture and Natural Resources Committee Vice-Chair Stephen Huffman, also got support from the PAC.

In June, the political action committee for parent company AES Corporation gave $1,000 each to campaigns for U.S. Sen. Joe Manchin, D-W.Va., and Dayton-area congressional Rep. Mike Turner.

The Duke Energy Corporation Political Action Committee has made hundreds of expenditures across multiple states since January, including donations to campaigns for more than two dozen Ohioans. Among them are McColley, Sen. Matt Huffman, Ohio House Speaker Bob Cupp, and HB 6 co-sponsor Rep. Shane Wilkin. Wilkin is also the sponsor of HB 317, which would ax electric security plans but still allow bill riders, while keeping HB 6’s coal plant subsidies and removing authority for energy efficiency programs. Manchin’s campaign committee got a donation as well.

The American Electric Power Committee for Responsible Government spent money on congressional campaigns for longtime coal lobbyist Mike Carey and former clean-energy-freeze supporter Troy Balderson, both Republicans. Manchin’s campaign got money as well.

Manchin played a major role in the bipartisan infrastructure deal that was passed on Nov. 5. However, he has resisted more sweeping legislation to deal with climate change, while also thwarting efforts in Congress to guarantee voting rights.

Back in 2016, Manchin had also called federal regulators, urging them to reject challenges to coal and nuclear bailouts for AEP and FirstEnergy. Some of what the companies wanted at the time wound up in HB 6.

AEP and its affiliates reported spending more than $5.1 million on congressional lobbying this year through Sept. 30. The total for 2020 was more than $7.8 million, and the amount for 2019 was $8.1 million.

It’s unclear why AEP’s level of congressional lobbying has been consistently higher than FirstEnergy’s for the past decade.

Positions on clean energy?

Issues on which AEP engaged in lobbying during this year’s third quarter include bills for the American Rescue Plan Act of 2021 and the Infrastructure Investment and Jobs Act, budgeting and reconciliation legislation, and appropriations for the federal departments dealing with the environment and natural resources. Also on the list is funding for low- and zero-emission vehicles.

“AEP has a successful track record of reducing emissions and advancing clean energy, and we have made commitments to continue that progress,” said spokesperson Tammy Ridout. She noted the company’s commitment to increase renewable generation from 19% today to 50% of its total capacity by 2030. The company has also sold or retired nearly 13,500 MW of coal-fueled generation, she said. Those sales include some plants for which AEP sought bailouts less than a decade ago.

AEP has supported mandatory clean energy proposals in the Clean Energy Innovation and Deployment Act of 2021 and the Clean Energy Future Through Innovation Act of 2021, Ridout said.

“Our customers, investors and other stakeholders expect that we are moving as quickly as possible to a clean energy future, and we are pursuing that goal,” Ridout said. “It’s critical to our customers and the economy that we make this clean energy transition in a way that ensures electricity remains reliable and affordable.”

At the state level, though, AEP Ohio’s president and chief operating officer, Marc Reitter, testified before Ohio lawmakers last month, urging them to keep HB 6’s coal plant subsidies for two 1950s-era coal plants. Representatives of Duke Energy Ohio and AES Ohio offered similar testimony.

FirstEnergy’s lobbying in Congress has focused on the bipartisan infrastructure framework, grid modernization, clean energy issues, and other matters, including bills with provisions for both renewable energy and carbon capture technology from coal plants. 

Spokesperson Durbin did not detail FirstEnergy’s position on renewable energy and carbon capture provisions in specific bills.

“We continue to review and have discussions about the proposed federal infrastructure and energy legislation,” Durbin said. “While we support efforts to reduce GHG [greenhouse gas] emissions, we are analyzing how the various proposals could affect our customers and our operations, especially regarding affordability and reliability impacts.”

The $1 trillion infrastructure bill passed on Nov. 5 includes provisions for energy efficiency, electric vehicles, and grid modernization, which could advance a transition to clean energy, as well as funding for transportation and climate change resilience. Environment America, the United States Public Interest Research Group, the Reimagine Appalachia coalition and other environmental advocates have applauded those provisions.

But the bill also authorizes $6 billion for noncompetitive nuclear power plants. Other provisions provide funding for carbon capture technology from fossil fuels, with an eye toward its widespread adoption. The Nuclear Information and Resource Service and Friends of the Earth released a report this summer, showing that the then-proposed subsidies for nuclear power would be more expensive than renewable energy and could in fact delay the growth of renewable energy.

And an Oct. 7 report from the Ohio River Valley Institute concluded that widespread adoption of carbon capture would cost much more than other technologies, such as renewable energy and storage.

Not the whole story 

A review of PAC spending and congressional lobbyist filings doesn’t tell the whole story about utilities’ political spending, said Brown at the Harvard Electricity Policy Group. Specifically, “it doesn’t tell you the dark money contributions.”

Indeed, most money in the HB 6 scandal did not come directly from companies or their PACs. Rather, the bulk went to dark money groups from other organizations that got money directly or indirectly from FirstEnergy and its current or former affiliates. Additional money came to dark money groups from organizations that got funds from AEP, Murray Energy (now known as American Consolidated Natural Resources), and others.

FirstEnergy’s settlement with the federal government now calls for some disclosures of its giving to certain nonprofits and to entities “known by FirstEnergy to be operating for the benefit of a public official, either directly or indirectly.”

However, that might still leave some wiggle room, especially on issues-focused organizations. Those provisions also don’t apply to other utility companies.

Multiple layers of nonprofits and dark money organizations can work like Russian nesting dolls, hiding the ultimate source of money. Dark money groups also can be like whack-a-moles: Once the role of one is unveiled, it may wind down operations, letting another organization pop up.

For years, for example, AEP gave money to a nonprofit group called Empowering Ohio’s Economy, which in turn gave some money to Generation Now, a dark money group that has pled guilty in the HB 6 criminal case. AEP disclosed in June that it had gotten a subpoena from the Securities and Exchange Commission, even though the company said it believed its participation in the HB 6 process was ethical and lawful.

Late last year, Empowering Ohio’s Economy disclosed that it had begun winding down operations and had given $2 million to Open Road Path. That nonprofit group also operates under Section 501(c)(4) of the Internal Revenue Code. And both groups have very similar mission statements.

Whether AEP will support the new organization in the future is unclear, and groups like Open Road Path aren’t required to disclose their donors. Meanwhile, whatever Open Road Path may have done with the $2 million it got from Empowering Ohio’s Economy last year won’t be known for at least a month or more.

Ohio utilities FirstEnergy and AEP still spending big on lobbying is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Documents show state utility regulators sought edits to draft versions of an audit they commissioned, prompting the removal of declarations that a ratepayer-funded bailout of two uneconomic coal plants was a bad deal for Ohio electric customers.

Staff at the Public Utilities Commission of Ohio, which sets customers’ water and electric rates, asked an auditor it hired to use a “milder tone and intensity” when describing bailouts of coal fired power plants funded by residential and industrial electricity users.

After reviewing a non-public draft of the audit, PUCO employee Mahila Christopher cited a few specific lines of concern in a September 2020 email to auditors, obtained via public records request. She specifically flagged language that states: “keeping the plants running does not seem to be in the best interests of the ratepayers.”

The sentence does not appear in the publicly released version of the audit.

Starting in 2014, PUCO began the process of approving requests from three utility companies — American Electric Power, Duke Energy, and Dayton Power and Light Co. (now known as AES) — to charge their customers “riders” on monthly bills to pay for the coal plant bailouts through 2024. The utilities are some of the largest shareholders of a cooperative called the Ohio Valley Electric Corp., which owns the plants. PUCO ordered the audit, an oversight mechanism, as part of the deal.

In 2019, Ohio lawmakers codified the bailouts, expanded them to all residential and industrial utility customers statewide, and extended them through 2030 in House Bill 6. That legislation is now at the center of a federal bribery case that has yielded guilty pleas of a lobbyist, a powerful political operative, a dark money nonprofit, and utility company FirstEnergy Corp. The former House speaker has been indicted on one count of racketeering, though he maintains his innocence. Facts proffered by FirstEnergy in its guilty plea implicate the former PUCO chairman of bribery as well, though he has not been charged with a crime and maintains his innocence.

Since HB 6 was implemented in January 2020, Ohio ratepayers have spent $166 million bailing out the plants, one of which is in Madison, Indiana, the other in Cheshire, Ohio.  The PUCO-commissioned audit ultimately concluded the plants “cost customers more than the cost of energy and capacity.”

In another email, one of the auditors tells PUCO she’ll delete another sentence referencing the conclusion that “the OVEC contract overall is not in the best interest of AEP Ohio ratepayers.”

In the publicly released version of the audit, no such sentence appears, even though the stated objective of the audit is to “investigate whether the AEP Ohio’s actions were in the best interest of its retail payers.”

AEP is far and away the largest shareholder of OVEC, owning about 43% of its equity. Duke owns 9%. AES owns 4.9%.

The email states staff needs “final acquiescence from PUCO Admin” regarding the “overall tone” of the report. A commission spokesman said this refers to the staffer’s supervisor.

The PUCO email was sent after the initial arrests in House Bill 6 but before the guilty pleas (October 2020) and public disclosures linking the PUCO chairman to the scandal (November 2020).

To that end, Christopher requested another edit, asking that auditors reduce their “level of detail/specifics” about the scandal. Specifically, she asked them to remove a reference to FirstEnergy, Generation Now (the FirstEnergy-funded nonprofit that pleaded guilty), and the charges against former House Speaker Larry Householder.

The request was apparently heeded. The public audit bears no reference to Householder, Generation Now, or FirstEnergy (as it relates to the company’s role in the scandal).

When FirstEnergy agreed to plea guilty to a lesser charge in July, it stated in court documents it paid PUCO Chairman Sam Randazzo $4.3 million shortly before he took office in exchange for regulatory favors. Randazzo has denied this, stating the payment was lawful and stemmed from his consulting work for the company.

AEP has been linked to the scandal through Generation Now, the nonprofit that pleaded guilty. Generation Now received $700,000 from Empowering Ohio’s Economy, a nonprofit solely funded by AEP. Earlier this summer, the company disclosed it received a subpoena from federal regulators “relating to the benefits to the company from the passage of H.B. 6.”

The emails reflect a trend of what’s known as “regulatory capture,” in which regulatory agencies created to act in the public interest wind up acting in the interest of the industries they’re intended to regulate. Gov. Mike DeWine appointed Sam Randazzo as chairman of the PUCO, despite public outcry from environmental advocates regarding his years of work in opposition to renewable energy on multiple fronts.

The Ohio Consumers Counsel, an independent but state-funded agency that represents residential ratepayers before the PUCO, obtained the emails in a public records request. An OCC official cited them as evidence of PUCO’s “utility friendly regulation” in testimony before lawmakers in support of legislation to repeal the OVEC bailouts.

OCC spokeswoman Merrilee Embs expressed outrage at the implications of the emails.

“As the state consumer advocate, we are dismayed with the PUCO’s emails catering to the utility (AEP) in the audit of coal power plant subsidies that Ohioans were charged,” she said. “This situation at the PUCO demands reform, and reform should start with commissioner appointments. It’s time to appoint consumer representatives to the PUCO.”

Matt Schilling, a PUCO spokesman, declined specific questions about the case, citing ongoing litigation and pending PUCO action on the audit report.

“There are pending motions for this case to go to an evidentiary hearing, which I expect will be ruled upon soon by the administrative law judge assigned to the case,” he said.

Ohio Capital Journal is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David DeWitt for questions: info@ohiocapitaljournal.com. Follow Ohio Capital Journal on Facebook and Twitter.

Ohio regulators made ‘utility-friendly’ edits to audit of coal plant bailout, emails show is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

This article was originally published by Ohio Capital Journal.

It’s going to take more than a bribery scandal on a historic scale to get energy money out of Ohio politics.

Campaign finance reports, submitted late last week, show the campaign contribution pipeline from the natural gas and utility industries to Ohio lawmakers’ campaign accounts is alive and well. The vast majority went to Republicans, who firmly control the statehouse.

Even among companies who benefitted from or are facing scrutiny related to House Bill 6 — whose passage yielded the ouster, indictment and looming trial of the former speaker of the Ohio House; three related pleas of guilt from lobbyists and a dark money nonprofit for racketeering; and an arrangement with prosecutors akin to a guilty plea from FirstEnergy Corp. — the donations continue to flow.

For instance, HB 6 provided a ratepayer funded bailout for two coal plants in Ohio and Indiana, owned by a cooperative called the Ohio Valley Electric Corp.

Equity of those plants is split between utilities American Electric Power (43%), Buckeye Power (18%), Duke Energy (9%), Dayton Power & Light Company (4.9%) and others. The legislation tacked a monthly fee on all residential and industrial ratepayers to prop up the failing coal plants — a bailout worth $114 million in 2020 alone and an estimated $700 million to their owners through 2030.

Between Jan. 1 and July 31, AEP contributed $60,500 to GOP state lawmakers and Gov. Mike DeWine. Its CEO Nick Akins gave $5,000 to DeWine. Four other AEP executives gave DeWine a combined $5,500 as well.

The company has not been charged with any crime related to HB 6. However, it announced earlier this year it received a related subpoena from the U.S. Securities and Exchange Commission. AEP was the sole funder of a nonprofit which donated $700,000 to Generation Now, according to tax records and statements from the company. Generation Now pleaded guilty to its role in the conspiracy and agreed to forfeit $1.5 million to the government.

Among the other OVEC shareholders: Buckeye Power contributed $41,200 to lawmakers, mostly Republicans; Duke Energy gave $21,000, mostly to Republicans; DP&L, now known as AES Ohio, gave $10,000 to Republicans.

FirstEnergy — which admitted to federal prosecutors last week that it gave $61 million to Generation Now, which was secretly controlled by Householder, and $4.3 million to former PUCO Chairman Sam Randazzo for favorable legal and regulatory treatment — did not report any donations thus far in 2021. Randazzo has not been charged with a crime and maintained his innocence in a statement last week.

Along with the utilities, the natural gas industry pumped big dollars into the General Assembly as candidates look ahead to 2022 elections.

NiSource, a natural gas company and parent of Columbus Gas of Ohio, donated nearly $62,000 almost exclusively to Republicans.

Dominion Energy, a natural gas company, gave more than $26,000 to Ohio Republicans.

IGS Energy, an Ohio based natural gas company, gave $23,000 to Ohio Republicans.

Additionally, Marathon Oil gave lawmakers $21,000, almost all to Republicans. The company’s chief financial officer gave DeWine $10,000 as well.

Industry wins

Fossil fuel companies scored two major legislative wins to date in 2021. The utilities that own the OVEC plants, meanwhile, have thus far staved off any vote on legislation to repeal their subsidy.

Around midnight on the last legislative session before summer recess, lawmakers passed Senate Bill 52. The legislation created a new mechanism allowing county commissioners to kill wind and solar projects early in their development. It also allows commissioners to block potential wind or solar projects in all or part of unincorporated areas in the county.

Commissioners have no such power over natural gas plants or pipeline construction, which are regulated by the Ohio Power Siting Board.

Campaign finance data shows how the industry funds concentrated in the Senate. Energy industry PACs gave the Republican Senate Campaign Committee $37,500 and Senate President Matt Huffman, R-Lima, $27,500. Sen. Rob McColley, R-Napoleon, lead sponsor of SB 52 and chairman of the Senate Energy and Public Utilities Committee, received $13,500.

Huffman and McColley did not respond to inquiries.

Also this summer, lawmakers passed House Bill 201, which forbids local governments from issuing any law or zoning code that “limits, prohibits or prevents” people and businesses from obtaining natural gas or propane services. Major cities around the U.S. have either enacted or proposed measures to ban or discourage the use of fossil fuels in new homes and buildings, according to The Wall Street Journal. Berkeley, Calif. passed the first gas ban in 2019.

Supporters of both bills dismissed comparisons between the seemingly contradictory concepts — county commissioners can scuttle a solar farm development but can’t pass laws restricting new houses from gas line hookups.

Lawmakers last winter, under pressure from the intensifying Householder scandal, repealed a massive bailout for two nuclear plants formerly owned by a FirstEnergy subsidiary — a key provision of HB 6. They also repealed a separate “decoupling” provision worth millions to the company.

The OVEC subsidies, however, remain on the books.

Legislation pending in the Senate Energy and Public Utilities Committee would repeal the bailouts to the OVEC coal plants. The bill has yet to come up for a committee vote, marking a win for its shareholders who continue to collect on the legislation.

What the companies said

The Ohio Capital Journal contacted companies named in this article to ask why they donated.

“Dominion Energy’s Politician Action Committee provides financial support to Ohio candidates on a bipartisan basis, solely using funds contributed by our employees,” the company said in a statement. “Not one penny comes from customer bills. Dominion Energy employs 1,600 people to deliver safe, reliable and affordable natural gas service to our 1.2 million Ohio customers.”

Duke Energy spokeswoman Sally Thelen said the company believes it should be active in the political process to shape energy in order to represent its customers, communities and shareholders.

“We continue to reinforce the principle of supporting public officials who support policies that enable our ability to safely deliver reliable, affordable and increasingly clean energy solutions and are an effective voice in important policy decisions,” she said.

“And it’s important to remember that there are others who are just as — if not more — active than us in the political arena, fiercely advocating for their own agendas, which do not always align with the best interests of our company and our stakeholders.”

AEP spokeswoman Tammy Ridout said the company uses its PACs to participate in the political process and engage lawmakers on issues that affect its ability to deliver reliable and affordable energy to customers.

“Participation in the political process ensures our voice is heard on matters that are important to our customers, our shareholders, our employees and our company,” she said. “The PACs are dedicated to supporting candidates for public office who understand and work toward solutions for issues important to AEP and the energy industry.”

NiSource spokesman Christopher Garland said the company’s PAC is voluntary and adheres to both company policy and relevant campaign finance laws.

“We strive to educate public officials about our business and the impacts of potential policy decisions,” he said.

Marathon spokesman Jamal Kheiry said the company’s PAC supports lawmakers who support relevant policies that are “committed to the availability of affordable, reliable energy to improve quality of life.”

Ohio Capital Journal is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David DeWitt for questions: info@ohiocapitaljournal.com. Follow Ohio Capital Journal on Facebook and Twitter.

Amid corruption scandal, energy money continues to flow to Ohio lawmakers is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

FirstEnergy and American Electric Power earn substantial revenues beyond base distribution rates for electricity use. 

Ohio utilities saw electricity sales drop this spring as the coronavirus pandemic prompted schools and businesses across the state to close.

The drop in energy use, however, did little to hurt profits as both FirstEnergy and American Electric Power shared positive results with investors.

The apparent disconnect can be explained by the complicated way in which utilities earn revenue, which largely comes from fees, riders, guaranteed returns on investments and other sources beyond base distribution charges for actual electricity use.

Critics say the utilities’ optimistic reports to shareholders recently highlight how policy provisions protect the companies from risk at the expense of ratepayers.

“This is a hard time for businesses large and small. But it strikes me that investor-owned utilities are faring comparatively well in the current situation,” said Sonia Aggarwal, vice president at Energy Innovation, a policy analysis firm in San Francisco. “Over the years they have negotiated riders and rate structures that insulate them somewhat from fluctuations in electricity demand due to economic and weather conditions, and those mechanisms are cushioning the blow to utilities right now, even given the substantial reduction in demand for electricity.”

Ohio’s investor-owned utilities this month each reported positive earnings per share (income divided by shares) for the first quarter. Ohio-based American Electric Power had earnings of $1.02 per share, while FirstEnergy announced quarterly earnings of $0.66 per share. Those figures compare with first-quarter earnings per share in 2019 of $1.16 for AEP and $0.59 for FirstEnergy. 

Duke Energy and AES Corporation, which owns DPL Inc. and Dayton Power & Light, also announced adjusted earnings per share of $1.14 and $0.29, respectively. In calls with investors, corporate leaders described shifts in demand from commercial and industrial customers toward the residential sector.

“Regardless of whether we forecast a V-shaped, a U-shaped or W-shaped COVID-19 recovery, we see our service territory as an arbitrage between residential load and commercial industrial load that is defined really by a pendulum between the financial characteristics of working from home versus the restart of commercial and industrial businesses,” AEP’s President and CEO Nick Akins said in his May 6 earnings call.

The company expects residential load to grow by 3% for the year while the commercial and industrial loads drop by 6% and 8%, respectively. But AEP still expects to meet its operating earnings guidance for the year of $4.25 to $4.45 per share.

Public ratemaking policies help insulate electric utilities from adverse economic consequences, especially in Ohio. Besides charges for transmission and distribution, Ohio utility bills include various riders. Some of those provide subsidies for utilities that continued to operate generation affiliates a decade ago when state after a competitive market began to develop in 2009. An analysis by Ohio State researchers last year shows that payments to subsidize non-regulated activities can range from around $26 to $52 on an average bill.

Beyond that, FirstEnergy and other utilities benefit from a “decoupling mechanism” authorized by last year’s House Bill 6, which provides subsidies for certain nuclear and coal plants and also gutted Ohio’s renewable energy and energy efficiency standards.

Yet while it scaled back energy efficiency standards and gets rid of a charge for the program, the law lets utilities peg distribution revenues to their 2018 distribution revenues plus amounts they collected for lost distribution revenue due to energy efficiency.

“Bizarrely, the [investor-owned utilities] will receive income from discontinued programs while not incurring the costs associated with service delivery,” said Ohio State economist Ned Hill in his testimony against HB 6 last year. “Being ordered by the legislature to not provide services while receiving the money that was once earned from providing those services from a de facto tax is a lobbyist’s dream come true.” Various other riders can also still be charged.

The Public Utilities Commission of Ohio approved that so-called decoupling mechanism for Ohio in January 2020 — a step that FirstEnergy President and CEO Chuck Jones had said would make the company’s utilities “recession-proof” when it applied for the rate adjustment last November.

Most of FirstEnergy’s distribution revenues from commercial and industrial customers come from fixed customer and demand charges, Jones said. And although a PUCO order in March pretty much halted utility disconnections for nonpayment, the commission has said it would entertain future rider requests to recover those funds from other customers.

Jones and Akins both also noted impacts on revenues from their utilities no longer collecting a credit support rider that the Ohio Supreme Court held unlawful last June. The utilities had collected those fees since 2017 but were not required to return or provide customer credits for any of the unlawful charges. By then FirstEnergy customers had shelled out around $440 million for the charges.

Ohio has begun to reopen some of its businesses, subject to physical distancing requirements and other restrictions. Yet it’s unclear how much life will get “back to normal” until a reliable vaccine is available for the virus that causes COVID-19. And it’s unclear how long it will take the economy the recover from the widespread shutdowns, disrupted supply chains, high unemployment and other impacts of the pandemic.

“I would remind you that prior to the pandemic we were already seeing reduced industrial sales due to the manufacturing recession,” Jones said in his April 23 earnings call. “However, our rate structures provide a measure of stability even in tumultuous times.”

Ohio policies cushion the pandemic’s impact on electric utilities is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

©2019 E&E Publishing, LLC
Republished with permission

American Electric Power Co. Inc., one of the nation’s largest utility companies and highest-profile emitters, is facing yet another multibillion-dollar test to see how fast it can shift from coal to renewables.

This time, it looks like AEP might succeed.

A roughly $2 billion proposal in the works calls for AEP utilities to acquire three planned Oklahoma wind farms known as the North Central Energy Facilities. Settlement agreements are pending in Arkansas and Oklahoma, while proceedings continue in Louisiana and Texas.

But a multistate wind power proposal is never a given. Less than two years ago, AEP saw its $4.5 billion Wind Catcher plan in the same region fizzle. AEP’s new wind proposal is smaller and less controversial. Yet it’s also awakening concerns about the costs of renewable investments.

The company’s journey illustrates the challenge of trying to change a generation mix amid competing priorities from regulators, investors, landowners, environmental advocates and customers.

Key aspects of the current proposal compared with Wind Catcher: a smaller capacity, no big transmission element and wiggle room. Some states can take on more of the 1,485-megawatt North Central Wind plan if other states don’t agree to take part.

“I think they’ve definitely learned their lesson,” Andy Bischof, a senior equity analyst with Morningstar Research Services LLC, said of AEP and its utilities. “They’re taking a different approach.”

A 2018 report from M.J. Bradley & Associates LLC placed AEP third-worst among the top 20 private and investor-owned power producers for 2016 carbon dioxide emission rates. Ohio-based AEP has been making progress, though critics remain. The company said it cut CO2 emissions by about 59% from 2000 to 2018. Investments in renewables also can present a chance for new returns for utilities.

AEP’s coal-fueled generating capacity dropped from 70% in 2005 to 45% last year, according to a recent company presentation. It’s seeking to cut coal to a 27% share of capacity by 2030. Capacity for hydro, wind, solar and pumped storage is projected to climb from 17% in 2019 to 37% by 2030, AEP said.

In 2018, AEP’s Wind Catcher plan died when Texas regulators rejected a company plan to acquire Oklahoma wind generation and invest in transmission (Energywire, July 27, 2018). CEO Nick Akins said AEP was disappointed it couldn’t move ahead with a plan to lower power costs and provide more clean energy and diversity for customers.

With its new plan, AEP is projecting savings over time of about $3 billion for customers of two of its utilities — Public Service Co. of Oklahoma (PSO) and Southwestern Electric Power Co. (SWEPCO). Those two companies also were part of the Wind Catcher proposal, which AEP said could have provided savings of more than $7 billion, according to a 2017 news release.

Al Armendariz, a deputy regional director at the Sierra Club and a former EPA regional administrator, said he’s hopeful AEP’s North Central project goes ahead. But he said AEP remains a major coal-burning power company that made poor decisions to prolong the lives of some coal plants and invest in new coal generation.

In 2012, an “ultra-supercritical” generating unit fueled by coal began commercial operation in Arkansas as SWEPCO touted its stake in the 600-MW facility. That stands in contrast to AEP’s current move to other resources.

“We support the positive things AEP is doing,” Armendariz said recently, adding, “We continue to encourage them to do more.”

Past and future critics

AEP’s new plan isn’t a slam dunk. Opponents could still gain traction as the review process continues in various states. The Texas docket provides a glimpse of concerns, including comments from Golden Spread Electric Cooperative and Cities Advocating Reasonable Deregulation (CARD).

Golden Spread asked the Public Utility Commission of Texas to condition its approval on requiring SWEPCO to hold transmission customers in the region “harmless from subsidizing the costs of additional transmission” that could be needed as a result of the wind facilities. Scott Norwood, a consultant who testified on behalf of CARD, recommended various conditions if the Texas PUC were to approve the plan, including what he called “more favorable guarantee provisions” previously tied to Wind Catcher.

“Based on my concerns regarding the relatively low and uncertain forecasted benefits, and relatively high capital cost of the Project, I do not recommend approval of SWEPCO’s application,” Norwood said in filed testimony.

Alfred Herrera, an attorney representing CARD, said the group remains open to discussions with SWEPCO about what guarantees could help protect ratepayers.

Criticism foreshadowed doom for AEP’s Wind Catcher, although it’s too early to tell how much pushback the new plan may face.

AEP’s Wind Catcher plan called for acquiring a 2,000-MW wind farm in Oklahoma that Invenergy LLC was working on — with some 1,400 MW slated for SWEPCO and 600 MW tied to PSO. The plan also envisioned a 765-kilovolt power line, which would have run hundreds of miles in Oklahoma.

Critics of Wind Catcher argued there wasn’t a traditional need for it. DeAnn Walker, chairwoman of Texas PUC, indicated in 2018 she didn’t think there were sufficient safeguards for ratepayers in a proposal for decision.

AEP doesn’t refer to North Central as a second version of Wind Catcher. Peter Main, a SWEPCO spokesman, detailed differences between the proposals in a recent statement.

Size is one point — for SWEPCO, it’s about 810 MW, compared with about 1,400 MW under Wind Catcher. The current project also involves several facilities from competitive bidding as opposed to a single-source project, Main said. And they are near a PSO/SWEPCO transmission system, he said, so there’s not an extended generation tie line in the proposal.

“And the current proposal has more flexible provisions for regulatory approval,” Main said. “It is scalable to align with regulatory approvals by state, subject to commercial limitations. States that approve the project would have the ability to increase the number of megawatts allocated to them should another state or states reject the proposal.”

An AEP investor presentation says a minimum of 810 MW will be needed for the new project to go forward.

Armendariz said the Sierra Club is happy that AEP structured North Central so no single state or state commission “has a veto effectively over the entire project.” The hope, he said, is that all four states approve it eventually.

North Central is furthest along in two jurisdictions — Oklahoma and Arkansas, where pending agreements include guarantees on items such as a cost cap and net capacity factor, as well as eligibility for certain levels of production tax credits. The settlement proposals in those states include various parties, such as Walmart Inc. and the offices of the respective state attorneys general.

In the Sooner State, a settlement agreement is pending before the Oklahoma Corporation Commission.

Golden Spread had hoped the Oklahoma commission would consider the comments it made, but “we won’t stand in the way of the other parties reaching a settlement,” said Mary Coyne, a spokeswoman for the electric cooperative.

In the Natural State, a settlement agreement is pending at the Arkansas Public Service Commission.

In Louisiana, a case continues before the Louisiana Public Service Commission. State regulators there backed Wind Catcher in the past, so there’s reason to think North Central also could get approval.

In Texas, the case remains under discussion in a docket at Texas PUC.

“We continue to make progress in Louisiana and Texas [as] we work with the parties to demonstrate the guarantees and customer benefits of our wind proposal,” Main said.

It’s hard to know how things will shake out, especially in Texas. A group called Texas Industrial Energy Consumers has been peppering SWEPCO with questions on everything from potential returns related to North Central to whether AEP’s presented gas forecasts have been higher than actual prices over the last decade.

Walker, the Texas PUC chairwoman, filed a memo last year to change how a couple of questions were structured on the topics of potential benefits to — and protections of — customers.

Invenergy, the developer of projects tied to North Central, indicated it’s poised to move ahead once regulatory approvals are received. The three proposed wind sites are located in north-central parts of Oklahoma.

“The Sundance Wind Energy Center is targeted to begin operations in late 2020, while the Maverick Wind Energy Center and Traverse Wind Energy Center are both targeted to begin operations in late 2021,” Beth Conley, an Invenergy spokeswoman, said in a statement.

Carbon targets

AEP maintains its focus includes shifting to cleaner energy.

Melissa McHenry, an AEP spokeswoman, said the company has retired over 8,600 MW of coal-fueled generation since 2011. And some coal units were converted to natural gas, she said.

McHenry also sought to add context around the Turk plant in Arkansas that was completed in 2012, saying it was proposed “before fracking advances created today’s abundant supply of cheap natural gas and also before advances in renewable generation technologies made them cost competitive with other options.” It was “the right investment” for customers, she said, to ensure low-cost and reliable power.

She pointed to the Turk plant’s efficiency and said it was designed with space for a carbon dioxide capture and storage retrofit, if that becomes viable economically.

“We have set very ambitious emission reduction targets, given the composition of our generation fleet just a few years ago, but there … still are huge uncertainties about how technologies will evolve over the next few decades,” McHenry said.

By 2030, she said integrated resource plans for AEP propose to add over 7,700 MW of new wind and solar generation and more than 1,600 MW of new natural gas generation to the regulated portfolio. More coal unit retirements are planned in places such as Oklahoma, Texas, Ohio and Indiana.

“We’ve set a CO2 reduction target at 70% reduction in 2030 from our 2000 baseline and an 80% emission reduction from 2000 levels by 2050,” McHenry said. “We are confident we will exceed the 80% reduction by 2050, but when that happens and where emissions will be in 2050 will depend on a lot of factors.”

Armendariz said he’s not disappointed that AEP had to turn to a smaller proposal in North Central once Wind Catcher faltered.

“It’s still a substantial investment and a substantial amount of renewable energy,” he said. “I think we fully support it, and we’re pleased to see [AEP] move forward like this.”

Armendariz said “really robust renewable energy growth” continues in Texas and Oklahoma, with interest in solar development in Arkansas and Louisiana, as well.

Louisiana has been the source of controversy given a move in much of the state away from traditional net metering for residential rooftop solar after a decision by state regulators last year (Energywire, Oct. 11, 2019). Armendariz said the Sierra Club supports customer-owned generation while also being happy to see utilities invest in renewables. A mix of both will bring higher renewable energy penetration at the lowest possible cost for consumers, he said.

“We think customer-owned generation is going to be a key part of gradually getting off of fossil fuels,” he said. “But we also think utility-owned renewable energy … has a big role to play, as well.”

Reprinted from Energywire with permission from E&E News, LLC. E&E provides daily coverage of essential energy and environment news at www.eenews.net.

A coal-powered giant bets on wind. Will it work? is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.