Some Things, You Just Can’t Make Up
We have well documented that Ohio customers have seen massive increases in the average electric supply rate. The first domino to fall in Ohio was due to EPA regulations (Clean Power Plan) forcing generation plants to close. The next impactful issue was the PJM capacity auction held in May 2012. These capacity prices were so high that the PJM separated out the First Energy’s transmission territory from the rest of the region.
According to PJM, prices increased due to the unprecedented retirement of the previously mentioned coal-fired generation plants. The PJM has also requested for the utility FirstEnergy, to build new high-voltage power lines from some of its power plants, and to provide upgrades to various substations and transformers. The cost of these upgrades, are estimated at roughly $263 million on the transmission project. That is only the beginning of a much larger $4.2 billion effort to revitalize the infrastructure. All of these costs will be passed through to consumers by way of electricity rates, which will increase annually until completed.
OHIO REGULATORS DID WHAT?
So just when you thought the beatings were over, Ohio utility regulators punched Ohio residents square in the eye again. First they approved a $6 billion bailout due to the power plants that were not economically viable. This upset many hard working tax payers in Ohio. Then the Ohio Public Utilities Commission ruled to allow the 2 major utility companies in Ohio, (First Energy and American Electric Power (AEP) to push their bad debt onto Ohio ratepayers.
FERC, (the Federal Energy Regulatory Commission) will ultimately decide if the ruling will stand. They have currently blocked the purchase agreements by rescinding the waivers they had granted AEP and First Energy until they further review the ramifications the order will have.
This will be a monumental decision that will effect much more than simply the Ohio consumers it revolves around. If FERC ultimately sides with the utilities, it will set a precedence for similar issues setting up to effect Texas, Michigan, New Jersey and New York.
HOW THIS PLAN WOULD WORK
First Energy and AEP’s power plants can no longer remain profitable because the power they produce is too expensive. So the utilities got the PUC to guarantee the purchase of their electricity. The cost, of course, would be passed down to Ohio consumers. (Even if you get your power from someone other than these utilities). That is a $6 billion bill for consumers to swallow between now and 2024, mainly because their utility companies made some terrible investments.
The plants in question are failing due to natural gas prices falling, which produced far cheaper energy from plants fueled by natural gas. That coupled with Americas push towards energy efficiency have greatly affected their power sales. The utilities claim their refusal to act responsibly and seek alternatives sooner was to ensure energy reliability in the region, and protect the jobs of those that work at the plants.
This is Where the Plot Thickens
The ruling has much more than an economic impact riding on it. The decision, in essence, will pave the way to keep dirty power plants on life support. This again would have a lasting effect on the other regions mentioned above, as well as the implementation of the Clean Power Plan.
With FERC placing a temporarily block on the order, this will delay any immediate costs to consumers at the present time. AEP has made it abundantly clear that if this ruling is not allowed to go through, they will focus all of their efforts to attempt to re-regulate Ohio’s energy market. Funny enough, so has First Energy. It’s funny because it is the first time in recent memory that these two power producers have agreed on anything. That means in essence, they are saying Ohio consumers are going to pay for this, one way or another.
Understand, re-regulation would serve only one purpose. To ensure that AEP and First Energy continue to make enormous amounts of money on power that cannot compete price wise, predominantly due to open competition in their energy market. With consumers having choices, they can choose to not buy dirty energy. They also are not required to buy their energy at what the utility says it should cost. Open completion has made that a reality in Ohio.
I live in Florida. I have no choice at all, as my state is regulated. Duke Energy sends me my bill, and I have to pay the piper what he is owed. Choice is a good thing. Without it, we are beholden to big business and whatever they decide.
For now, there is really only two things that are going to be on Ohio consumers’ minds:
- First, if this ruling ends up going through, how much will their electricity bill go up as a result of this?
- What could possibly happen next?
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SVP Customer Relations
North American Energy Advisory
This articles was originally posted at: http://naea.today/another-black-eye-for-ohio-energy-consumers/ on