Ohio legislature needs to act on House Bill 6 – then fix how state treats utilities: Mike Haugh
As the dust is settling on the 2020 elections in Ohio, the legislature can now focus on the repeal of controversial House Bill 6. This is the legislation that will give over $1 billion to two nuclear power plants and another $400 million to two aging coal plants, one of which is in Indiana, and was part of an alleged $60 million bribery scandal involving the Ohio House speaker.
It seems as though everyone is acting to rectify this mistake except the legislature. The company at the center of the scandal, FirstEnergy Corp., has fired its CEO and two other high-ranking officers. Two defendants in the federal complaint pleaded guilty to participating in a racketeering conspiracy. The Public Utilities Commission (PUCO) initiated an audit of FirstEnergy’s compliance with corporate separation laws. The Ohio attorney general has filed a lawsuit to prevent the collection of the recently enacted subsidies from Ohio consumers.
As all of this is happening, three pieces of legislation were introduced to fully repeal House Bill 6 — and there has been a grand total of four hearings with a grand total of nine handpicked witnesses to testify before the committee.
As we enter the lame-duck session, it is imperative the legislature take action on what some have called the worst legislation in history. The simplest way to remedy this malfeasance is to repeal the original bill. A better option would be to pass House Bill 772 sponsored by Rep. Mark Romanchuk. This legislation not only repeals the coal and nuclear bailout in HB 6, but also ends the state’s renewable and energy efficiency mandates. This legislation stops all energy subsidies and allows the electric markets to operate properly and bring the lowest prices and most efficient energy to customers.
The best option for the legislature is to prevent this type of corruption from occurring in the future. This can be done by limiting the power of utilities at the Statehouse.
In Ohio, utilities operate as monopolies for the delivery of electricity to customers’ homes and businesses. These monopolies do not operate under normal economic conditions; they are given a territory and when seeking to increase customers’ rates they must go through a proceeding at the PUCO.
The PUCO approved a similar bailout in 2017, which was eventually challenged in federal court, so this is also a regulatory issue that must be addressed in any legislation.
If the PUCO denies utilities’ requested increase, they can go to the legislature to pass laws that allow them to increase rates. This was the avenue FirstEnergy took. In 1999, Ohio deregulated the generation portion of customers’ bills. The generation rates on Ohio customers’ bills are not regulated by the PUCO and are subject to the wholesale electric markets.
FirstEnergy’s deregulated affiliate owned several generating units, including the two nuclear plants located in Ohio that benefited from the subsidies in House Bill 6. These nuclear plants could not compete in the electric markets.
Due to the blurred lines between the deregulated generation and regulated utility businesses, FirstEnergy went to the legislature to ask for a bailout of their deregulated generating units. This goes against Ohio policy dating back to 1999.
This type of rent-seeking needs to be stopped. There needs to be a full divestiture of all generation owned by utility affiliates to prevent this behavior in the future.
The Ohio legislature needs to act on repealing House Bill 6 and eliminating unnecessary subsidies from customers’ bills. Once that is complete, it needs to prevent this type of impropriety from occurring again. Electric competition can bring about lower prices and innovation. This was the legislature’s intention in 1999 and it is time to let customers reap the full rewards the energy markets can offer.