Dave Anderson Ohio’s largest utilities are opposing state legislation that could help rein in scandal-tainted electric bill riders that have cost their customers billions of dollars.
Executives from AEP, AES, Duke Energy, and FirstEnergy’s Ohio utilities all provided testimony opposing the legislation, House Bill 15 and Senate Bill 2, multiple times in recent weeks to the energy committees of the Republican-controlled Ohio House and Senate. The state senate passed its version of the bill last week with unanimous support.
Philip Moeller, the Vice President of Business Operations and Regulatory Affairs for the Edison Electric Institute (EEI), also testified against the bills. EEI is the industry association for the nation’s investor-owned electric utilities and is largely funded with money that member utilities collect from customers through their electricity bills. Moeller makes more than $1 million a year working for EEI, according to the group’s latest available federal tax reports.
AEP, AES, and Duke Energy oppose repealing coal plant bailout, which could cost Ohio utility ratepayers $1 billion by 2030
AEP Ohio President Marc Reiter, Duke Energy Ohio President Amy Spiller, and AES Ohio General Counsel Christopher Holon and Senior Director of Regulatory & RTO Affairs Sharon Shroder all specifically opposed provisions of HB 15 and SB 2 that would end the ratepayer bailout of the coal-fired Clifty Creek and Kyger Creek power plants, a bailout that’s cost Ohioans nearly $680 million over the past decade. The cost to ratepayers could rise to $1 billion by 2030, according to an analysis prepared for the Ohio Manufacturers’ Association, which has long opposed the coal plant bailout.
The two coal plants are owned by the Ohio Valley Electric Corporation (OVEC). AEP, AES, and Duke are all shareholders in OVEC, with AEP owning the largest share with a nearly 40 percent ownership stake.
In 2019, state lawmakers extended the ratepayer bailout of the OVEC plants until 2030 through the bribery-tainted House Bill 6. AEP, AES, and Duke have collectively raked in nearly $450 million through the HB 6 coal plant subsidies since 2020 alone, according to the Ohio Consumers Counsel.
State lawmakers previously repealed HB 6’s $1 billion ratepayer bailout of two nuclear power plants that were owned by a bankrupt subsidiary of FirstEnergy that became Energy Harbor, and was later acquired by Vistra Corp.
Ohio’s former Republican House Speaker Larry Householder was sentenced to twenty years in federal prison for racketeering in 2023, after a trial that detailed how FirstEnergy secretly paid $60 million to make Householder speaker and secure the nuclear plant bailout via HB 6. Householder and FirstEnergy used 501(c)(4) nonprofit organizations, which are not required by the IRS to publicly disclose their donors, with names like Generation Now and Partners for Progress to conceal the flow of money.
FirstEnergy reached a deferred prosecution agreement with prosecutors that allowed the utility company, which was also charged with a federal crime, to avoid having its own criminal case go to trial. FirstEnergy agreed to pay a $230 million fine and cooperate with the ongoing federal investigation of utility corruption in Ohio.
AEP secretly funded Empowering Ohio’s Economy, a 501(c)(4) that funneled $1.4 million into several 501(c)(4)s involved in the Householder case, including Generation Now, the Coalition for Growth & Opportunity, and Coalition for Term Limits. AEP, the largest beneficiary of HB 6’s OVEC bailout, has not been charged with any crime, but did agree to pay a $19 million penalty to settle a related investigation by the Securities and Enforcement Commission.
In his testimony last month opposing HB 15, Reiter described the OVEC coal plants as “essential” to power grid reliability.
“This is especially important during times of extreme weather conditions which our state is experiencing frequently,” Reiter testified.
Coal-fired power plants are a major source of carbon dioxide pollution that’s driving harmful climate change and fueling extreme weather that threatens the grid. The OCC estimates that the OVEC plants emitted nearly 60 million tons of CO2 into the atmosphere just since 2020.
The Clifty Creek coal plant is located in Indiana, not Ohio. Fuel receipt data available from the U.S. Energy Information Administration shows most of the coal purchased for the OVEC plants last year was imported from mines in Kentucky and West Virginia owned by Alliance Resource Partners. The coal company’s CEO Joseph Craft is a major GOP fundraiser, and worked with FirstEnergy on a failed effort to secure a federal bailout for coal-fired power plants during President Trump’s first term.
The Ohio Coal Association provided testimony in support of maintaining the OVEC coal plant bailout. Randy Eminger of the coal industry-backed Energy Policy Network also testified and recommended steps Ohio could take to avoid further coal plant closures, including requiring that any new renewable energy generation in Ohio be backed up by “dispatchable” power (i.e. coal or natural gas).
Eminger and the Energy Policy Network previously joined with Craft’s coal company to form the Indiana Coalition for Affordable and Reliable Electricity, or ICARE, a front group that fought the Indiana utility NIPSCO’s plans to retire its coal plants and invest in new wind power.
Ending Electric Security Plans that have cost Ohio utility ratepayers billions
The utilities and EEI also took issue with provisions of the new legislation eliminating Electric Security Plans (ESPs) that were created as part of a 2008 Ohio energy law. ESPs have enabled AEP, AES, Duke and FirstEnergy to rake in $3.7 billion from Ohio ratepayers since then through bill riders, according to the OCC. AEP, AES, and Duke used their ESPs to charge customers to bail out the OVEC coal plants before HB 6 became Ohio law in 2019, the OCC told state lawmakers last year.
FirstEnergy greased the wheels for the Public Utilities Commission of Ohio’s approval of its Electricity Security Plan IV through a secret side deal with large energy users flagged by state and federal prosecutors in the indictments of former FirstEnergy CEO Charles E. Jones and lobbyist Mike Dowling. The side deal is also now under investigation by the PUCO.
The federal criminal investigation found FirstEnergy secretly paid $22 million between 2010 and 2019 to Samuel Randazzo, at the time a prominent energy attorney and lobbyist who represented the Industrial Energy Users-Ohio and anti-wind power interests in Ohio. In 2015, FirstEnergy secretly agreed to increase Randazzo’s consulting payments in exchange for getting IEU-Ohio to drop its opposition to the utility’s ESP IV before the PUCO.
FirstEnergy’s final $4.3 million consulting payment to Randazzo, made just before his appointment as PUCO chairman by Governor Mike DeWine in early 2019, was later deemed a bribe by prosecutors. Randazzo was indicted on state and federal criminal charges, but died by suicide last year.
The latest version of HB 15 would also bar utilities from using cash payments to induce parties to enter into a settlement of a PUCO matter, and from entering into any secret arrangement or financial or private agreement with a party to a settlement that’s not disclosed publicly.
Opposing ratepayer refunds for unlawful bill riders
All four of the utilities took particular issue with parts of HB 15 and SB 2 that would close a longstanding loophole in Ohio law that since 2009 has allowed AEP, AES, and FirstEnergy to avoid refunding $1.5 billion via bill riders and charges collected from ratepayers that were later found to be unlawful by the Ohio Supreme Court, according to the OCC.
“I commend the legislature for finally addressing this issue as it is long overdue and I strongly urge the passage of this provision to prevent the travesty that the current situation has caused,” Janine Midgen Ostrander, the former Consumers’ Counsel for the State of Ohio and now a fellow Fellow at Pace University Law School, Energy and Climate Center, said in testimony before the Ohio Senate Energy Committee last week.
Just one of those unlawful riders cost customers of FirstEnergy’s Ohio utilities $460 million. A PUCO audit could not rule out that FirstEnergy may have used some of the ratepayer money it collected through the same Distribution Modernization Rider to pay for bribes.
AEP has avoided having to refund approximately $525 million to ratepayers who paid for ESP riders that were found to be illegal, based on the OCC’s tally. AES customers have missed out on nearly $550 million in refunds due to the loophole.
Ratepayers could still see electricity bills rise under the new legislation
The utilities are asking state lawmakers to make fundamental changes to the laws governing utility ratemaking in Ohio, as a tradeoff for the reforms included in HB 15 and SB 2.
As currently written, both bills allow electric utilities to choose to “reasonably forecast” – or estimate – the base rates to be paid by customers, rather than basing rates on actual documented operating costs from recent years.
“We also appreciate that S.B. 2 includes provisions that would support improvements to utility transmission and distribution service, including the use of fully forecasted future test years in base rate cases…” FirstEnergy Ohio President Torrence Hinton told the Ohio Senate Energy Committee last month.
“Allowing the electric utilities to use a fully forecasted test period for setting rates and trackers… is probably the most draconian provision of this legislation,” the OCC said last year of an earlier bill that contained similar language. “It undermines the very foundation of public utility regulation in Ohio by taking away consumer protections currently written into the law.”
“While this bill addresses many key energy policy components, it is important to not overturn decades of ratemaking law that has stood the test of time and provided important protections to customers,” the Ohio Manufacturers’ Association said in testimony earlier this month on SB 2. “For example, authorizing the electric utilities to forecast their test years in rate cases will encourage higher projected costs and lower projected revenues, leading to an increase in customers’ bills.”
The Ohio House Energy Committee is expected to vote on HB 15 as soon as Wednesday.
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