LOVELAND MAGAZINE

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Tag: AES Ohio

  • Millions of Ohioans facing home gas and electric rate hikes

    Millions of Ohioans facing home gas and electric rate hikes

    Duke’s parent company made $820 million in profit in the first quarter of 2022 after netting about $3.6 billion last year. It paid its shareholders $3.1 billion in dividends in 2021 and paid its CEO $16.4 million in salary.

    BY: JAKE ZUCKERMAN –Ohio Capital Journal

    Ohio utility companies have asked state regulators for permission to raise home gas, electric and water costs on more than 2.75 million Ohio customers.

    Those charges could be spread between customers of Columbia Gas, AES Ohio, Duke Energy, and Aqua Ohio. The utilities, all investor-owned, are collectively asking for another $400 million in annual charges.

    Any base rate increases require the approval of the Public Utilities Commission of Ohio, which is headed by five commissioners chosen by the governor for five-year terms. The PUCO’s staff review the companies’ requests and pose recommendations to the commissioners, who decide what the utilities can ultimately charge their customers.

    The utilities’ requests come in an inflationary period — consumer prices are up 8.6% over the year ending May 2022 and unleaded gas costs just below $5 per gallon. Last week, the head of the U.S. Federal Reserve said a recession is a possibility.

    “It is bad timing for utilities to be seeking rate increases at the PUCO, with consumers already hurting from soaring energy prices and inflation,” said Bruce Weston, executive director of the Ohio Consumers’ Counsel, a state agency that represents residential ratepayers in PUCO cases.

    “Ohio should lead with its heart and keep Ohioans connected to their utility services.”

    They also come at a turbulent time for the commission. Its former chairman resigned in 2020 after FBI agents were seen raiding his home. Last summer, the utility FirstEnergy Corp. alleged in court documents that it paid him a $4.3 million bribe for regulatory favors. He has denied wrongdoing and has not been charged. The U.S. Department of Justice twice subpoenaed the PUCO last year for records related to the case.

    Two commissioners previously worked for the companies they now regulate. Commissioner Dan Conway previously represented American Electric Power as an attorney in private practice. Commissioner Lawrence Friedeman has worked for IGS Energy, Vectren Energy Delivery of Ohio, Columbia Gas Services, and the Ohio Gas Association.

    Thus far, the PUCO staff has recommended granting slimmed-down versions of rate hike requests from Columbia Gas, Duke and Aqua Ohio. The AES case awaits a key ruling from a PUCO judge. None of the four has reached a final decision.

    A rate freeze would be very bad for customers. It would be damaging to the company’s credit ratings and make it difficult, if not impossible, for the company to provide reliable service.

    – AES Ohio attorney at a PUCO hearing last month

    Columbia Gas

    Columbia Gas asked the PUCO to allow a $221 million annual rate increase for its natural gas distribution service. This would take the form of a fixed fee increase, up from $16.75 per month to $46.31. According to analysis from the Ohio Consumers’ Counsel, that could increase to an $80 fixed cost per month in five years.

    PUCO staff identified some evidence of the company padding its costs in their report. When PUCO staff reviewed Columbia’s cost data provided by the utility to justify the hike, they found the company included $304,000 in costs for a workout facility and locker rooms at its downtown headquarters. The report also found an instance where the Columbia acquired five “thermal cameras” for COVID-19 temperature checks, each at a cost of $14,995. PUCO staff called the spending “significantly excessive” compared to a handheld thermometer.

    The PUCO staff recommended the commissioners approve a more modest base distribution revenue increase of between $35 million and $58 million per year. The OCC urged the PUCO to go even lower, proposing a $9.8 million increase.

    The proposed increase was the subject of a handful of sparsely attended public hearings last month. Evidentiary hearings start next month. They’ll be followed by a round of briefings before a final decision, according to a PUCO spokesman.

    NiSource, the utility’s parent company, made $431 million in profits in the first quarter of 2021. Last year, it paid its CEO $6.6 million, and paid its shareholders $345 million in dividends.

    Company spokesman Eric Hardgrove declined to answer specific questions about the gym or the thermometers.

    “Columbia is committed to our customers and the communities we proudly serve,” he said. “To continue to provide safe, affordable and reliable natural gas service, we must continue to invest in our system to upgrade aging infrastructure, just as investments are made in bridges, roads and other infrastructure in our cities, towns and communities. In addition, Columbia offers a wide variety of energy assistance, energy efficiency, payment plans, and PIPP to help customers afford their utility bills.”

    Duke Energy

    Duke Energy, which services 700,000 customers around Cincinnati, proposed raising both its electric rates and its gas rates. (It has comparatively few gas customers).

    On the electric side, the company requested a 10% base distribution revenue increase, which comes out to about $55 million per year.

    According to the OCC, this means a typical residential customer will see a monthly base distribution charge increase from about $37 to $49, costing roughly $144 per year.

    PUCO staff recommended a more modest increase of about .33% to 3%, or about $2 million and $15 million.

    On the gas side, Duke also filed a pre-application with the PUCO to raise its natural gas rates. However, this is in its early procedural stages and wouldn’t take effect until at least 2023.

    For electric costs, the PUCO is holding public hearings next month before an evidentiary hearing, which could take a week or so. Then comes a round of court filings and a commission decision. A PUCO spokesman guessed a decision could come mid-fall at the earliest.

    The utility’s parent company made $820 million in profit in the first quarter of 2022 after netting about $3.6 billion last year. It paid its shareholders $3.1 billion in dividends in 2021 and paid its CEO $16.4 million in salary.

    Company spokeswoman Sally Thelen said Duke is making smart investments to provide “safer and more reliable and secure” energy to customers while “diligently lowering operation and maintenance” costs. She said Duke is allowed to earn a fair return on its investments.

    “We know how vital electricity is to our customers, communities and region, and that energy is a significant monthly expense for our customers,” she said. “We also know that higher bills are never embraced. That’s why we continue to work hard to keep our costs down. We remain committed to helping our customers who may be experiencing financial hardship and struggling to pay their everyday expenses and energy bills. Duke Energy continues to support its customers, and connect them with available assistance and offer tools and programs – including flexible payment plans – to help manage their energy bills.”

    AES Ohio

    AES Ohio — formerly known as Dayton Power and Light, which serves 527,000 western Ohio customers — asked for a 49% base distribution revenue increase worth about $121 million per year.

    According to the OCC, this would raise an average customer’s bill by about $13.42 per month.

    The utility’s parent company, AES, has faltered compared to its peer companies, reporting a $409 million net loss in 2021, as it paid its CEO $14 million in salary. Addressing the PUCO, AES Ohio’s CEO testified to the company’s “very fragile” financial condition, according to the Dayton Daily News.

    In July 2021, the PUCO staff initially recommended a rate increase to boost AES’ base distribution revenues by at least $61 million. However, staff have since sided with arguments raised by the OCC and said the company’s 2009 agreement with the commission blocks the company from raising its rates.

    The question was put before a PUCO judge at a hearing last month. Jeff Sharkey, an attorney representing AES Ohio, made several arguments against the existence of a rate freeze, including that state law doesn’t give the PUCO the power to order one in the first place. He said the utility has already struggled with reliability. A failure to increase its revenue could harm its credit rating, which threatens the company’s service.

    “A rate freeze would be very bad for customers,” he said, according to a transcript of the hearing.

    “It would be damaging to the company’s credit ratings and make it difficult, if not impossible, for the company to provide reliable service.”

    The case awaits a final decision from the PUCO. Company spokeswoman Mary Ann Kabel defended the rate increase request, stating it covers the cost of grid investments.

    “Since our last distribution rate case in 2015, the updated distribution base rates would allow us to recover for investments required and are already completed as a result of the devastating 2019 Memorial Day tornadoes,” she said. “It also allows us to continue performing important activities, such as enhanced tree trimming to reduce the likelihood and length of outages. Over the years, AES Ohio has taken the necessary steps to keep rates reasonable through efficient distribution operations to meet the growing needs of our customers. Today and with the proposed increase we continue to have with the lowest distribution rates of the investor-owned electric utilities in Ohio.”

    Aqua Ohio

    Aqua Ohio, a subsidiary of Essential Utilities, provides treated water for about 150,000 Ohioans. It proposed to the PUCO a base distribution revenue increase of about $8.3 million (12%). Staff counter-proposed a $2.3 million to $4.1 million revenue increase.

    The application is still pending review.

    An unopposed settlement agreement was filed this month by all parties to the case. That settlement awaits approval from the commission. It calls for a rate hike, though less than the company originally requested. It also calls on the company to fund a $20,000 account annually via its shareholders as a bill-pay assistance program for low income customers, and to start disclosing the number of residential service disconnections per year.

    Aqua Ohio’s parent company, Essential Utilities, made nearly $200 million in profits last quarter and $432 million in profits in 2021. Spokesman Jeff La Rue defended the proposed rate increase.

    “Aqua has invested more than $147 million in water since our last rate case,” he said. “That investment is important to ensure safe and reliable services as well as regulatory and environmental compliance. Our rate case is an attempt to recover a portion of that investment.”

  • Ohioans spent $211 million subsidizing two coal plants over last two years

    Ohioans spent $211 million subsidizing two coal plants over last two years

    BY: JAKE ZUCKERMAN – Ohio Capital Journal

    Electric customers across Ohio collectively spent an estimated $211 million via add-on bill charges over the last two years to cover for losses from two coal-fired power plants that continue to bleed millions annually, according to new data from state regulators.

    The money to the Ohio Valley Electric Corp. (OVEC) — an entity comprised of several investor-owned utilities from multiple states that operates the plants — flows thanks to a 2019 state law now at the center of a criminal bribery prosecution.

    The Public Utilities Commission of Ohio began to allow three of the utilities that own and are contractually obligated to buy power from OVEC — American Electric Power (43% equity stake), Duke Energy (9%), and AES Ohio (4.9%) — to pass on their losses on OVEC to their customers, starting in the mid-2010s. The payments were originally only allowed through 2024. Through 2019, the three utilities’ customers were charged an estimated $159 million on OVEC.

    House Bill 6, a law passed in 2019 that’s now the focal point of what prosecutors have said is the largest political corruption investigation in state history, extended the subsidies through 2030 and spread the three utilities’ (AEP, Duke and AES) losses to electric customers of all Ohio utilities (not just those that own OVEC).

    In 2020, Ohio electric customers statewide paid $115 million to OVEC’s owners to cover their losses on the deal, according to data provided by a PUCO spokesman. In 2021, they paid about $97 million (July through December 2021 costs are estimates). Under the law, residential customers pay a maximum $1.50 per month to utilities to cover their OVEC losses. Industrial customers pay a maximum of $1,500.

    OVEC operates two 1950s-era coal plants in Cheshire, Ohio and Madison, Indiana, originally built to power the federal government’s uranium enrichment facilities near Portsmouth. That agreement ended in 2003. The utility companies that own OVEC last renegotiated their contract in 2011 extending its life through 2040.

    Technically, the OVEC plants could save utility customers money if OVEC could generate and sell electricity at below-market costs. However, a mix of market forces, environmental regulations and recently spending more than $1 billion on a “scrubber” system designed to limit emissions have left the plants selling electricity at costs well above those of PJM, an energy marketplace serving utilities in 13 states including Ohio.

    “[Our] analysis shows that at this time, the OVEC plants cost customers more than the cost of energy and capacity that could be bought on the PJM wholesale markets,” wrote London Economics International, a firm the PUCO commissioned to audit the subsidies, in December.

    A draft version of a 2020 PUCO-commissioned audit by the same firm found that “keeping the plants running does not seem to be in the best interests of the ratepayers.” The line was removed from the final version at the request of a PUCO staffer who asked the auditors to use a “milder tone and intensity of language,” according to emails obtained by the Ohio Consumers’ Counsel (OCC), which represents ratepayers in PUCO cases and has advocated ending the OVEC subsidies.

    In a 2018 bankruptcy filing, FirstEnergy disclosed losing $12 million per year due to its 4.85% equity stake in OVEC. As lawmakers considered HB 6, legislative analysts estimated Ohio utilities paid $94 million above wholesale market costs in 2018 alone to purchase OVEC-generated electricity.

    Along with the raw finances, Ohio consumers are subsidizing plants that have belched nearly 21 million tons of carbon dioxide, 21,000 tons of nitrogen oxide, and 12,000 tons of sulfur dioxide into the atmosphere since January 2020, plus smaller discharges of arsenic, lead, and mercury, according to data from the U.S. Environmental Protection Agency provided by the OCC.

    “Why the hell is this still in place?” said Neil Waggoner, an advocate with the Sierra Club’s Beyond Coal campaign. “I think that this is utility capture in practice. This is the utilities in this state having a death grip on the regulators and people in power to the point that they’re getting exactly what they want.”

     The Clifty Creek Power Plant, in Madison, Indiana, which is operated by OVEC. Photo taken by Rep. Casey Weinstein, D-Hudson, who visited the plant and has called for a repeal of state law forcing Ohio ratepayers to subsidize it.

    A sticky bailout

    FirstEnergy Corp. admitted in July to paying more than $60 million to an account controlled by the former House Speaker and his allies to ensure passage of HB 6. The prosecutors’ allegations have focused in court documents on an estimated $1.3 billion nuclear bailout and other non-coal related provisions of the sweeping bill that are favorable FirstEnergy. Former speaker Larry Householder, accused of using the money to engineer passage of the bill and shore up his own political aims, has pleaded not guilty. Two Householder allies involved in the alleged scheme have pleaded guilty to racketeering.

    State lawmakers in early 2021 passed legislation repealing the nuclear bailout and “decoupling” provision (a ratepayer-backed revenue guarantee for FirstEnergy). However, the OVEC bailout was left intact.

    There are bipartisan efforts in the House and Senate to repeal the OVEC bailout from state law, and the narrower PUCO-approved bailout that preceded them. Neither has come up for a vote and the sponsors are pessimistic on their chances.

    Sen. Mark Romanchuk, R-Ontario, perhaps the plants’ most prominent critic and co-sponsor of the Senate legislation, said he is in negotiations with the utilities that own the plants and is not giving up. He declined an interview.

    “Not sure where things will go but we’re not giving up,” Romanchuk said.

    House Democrats have called for a repeal of the OVEC subsidies, though they only control 34 of 99 seats in the chamber. Rep. Jeff Crossman, a Parma Democrat who recently announced plans to run for attorney general, said the OVEC charges should be repealed but as much is unlikely.

    He said OVEC’s sponsors contribute tens of thousands in campaign contributions per year, mostly to Republicans. AEP, through a middleman, contributed $700,000 to Generation Now, the account prosecutors say Householder used to engineer passage of HB 6 in the first place.

    “There’s probably not a will to undo the OVEC charges,” he said. “They donate gobs of cash to the right folks. There’s just no other reason to support these plants.”

    House Speaker Bob Cupp, R-Lima, said in October he doesn’t believe there’s support in the House Republican caucus to repeal the coal bailout.

    House Majority Leader Bill Seitz, R-Green Twp., has told several state media outlets the bailouts aren’t going anywhere. He did not respond to written questions about the uneconomic nature of the plants, or why ratepayers should cover their owners’ losses on them.

    “We’ve beat this [OVEC] horse to death. It’s not going to change,” Seitz said to Cleveland.com in October. “They’ve introduced God knows how many bills — none of them are going anywhere, in my humble opinion.”

    Michigan takes action

    AEP is by far OVEC’s largest shareholder, with a roughly 43% equity stake in the company, and the two share several executives.

    While repeal efforts in Ohio are at a lull, other states have signaled resistance to allowing utilities to continue to pass OVEC’s owners’ losses to customers.

    The Michigan Public Service Commission in a November order noted that OVEC’s costs exceed the market price of electricity by tens of millions. It warned that AEP’s local utility may not be able to pass on all its OVEC losses to customers that are “incurred because of imprudent” decisions.

    “The order today put I&M [an AEP unit] on notice that the Michigan share of these excess costs are unlikely to be permitted without additional evidence that continuing to purchase power from the units was in the best interest of its customers,” the Michigan regulators said in a news release.

    AEP spokesman Scott Blake said in an email the OVEC plants are “critical resources that help ensure the reliability of the grid and offer protection from increases in the costs of other fuels.” He said AEP Ohio customers for decades benefitted from OVEC’s power via affordable electricity and good jobs. OVEC, he argued, insulates customers from cost spikes caused by things like a surge in natural gas prices or a shortfall of renewable energy supply.

    “AEP Ohio customers benefited for decades from the power provided by OVEC in the form of affordable electricity and good jobs,” he said. “While there may be years where power from OVEC is more expensive than the market, as generation from natural gas and other sources becomes more expensive, customers could see refunds from OVEC in the future.”

    Fitch Ratings determined OVEC’s outlook is “stable” in February — just one step above “speculative.” However, its analysts found that repealing HB 6 wouldn’t necessarily harm OVEC’s prospects. The analysts reasoned that for one, in the event of a repeal, AEP, Duke and AES would still be able to pass on their OVEC losses to customers. For two, the “sponsoring” utilities have already contractually agreed to purchase the power OVEC generates, regardless of who eats the losses.

    Meanwhile, in a Virginia appeal of a public service commission rate case, Virginia Attorney General Mark Herring accused OVEC of charging an AEP utility in Virginia well beyond market costs for electricity. The case is ongoing.

  • Ratepayers spent $166 million and counting bailing out coal plants under law that passed via bribes

    Ratepayers spent $166 million and counting bailing out coal plants under law that passed via bribes

    BY: JAKE ZUCKERMAN and Ohio Capital Journal

    Despite several plea deals with federal prosecutors regarding bribery on a massive scale to pass legislation providing a windfall to nuclear and coal companies, Ohio utility customers continue to fund bailouts of failing coal-fired power plants in Ohio and Indiana.

    In the first half of 2021, Ohio utility customers paid $51 million to subsidize the plants, which are jointly owned by Ohio utility companies like American Electric Power, Duke Energy, AES Ohio and others. That’s on top of the $115 million ratepayers paid last year, according to data from state utility regulators.

    Sen. Mark Romanchuk, R-Ontario, has spearheaded efforts within the GOP on a piece-by-piece strategy to repeal the remnants of House Bill 6, which codified the coal bailout through 2030.

    HB 6 passed via the muscle of $61 million that utility giant FirstEnergy Corp. paid into an account secretly controlled by House Speaker Larry Householder, R-Glenford. That money funded the bill’s passage and enriched those in on the scheme, according to a statement of facts the company proffered to the U.S. Department of Justice. (Householder has pleaded not guilty to a count of racketeering and awaits trial.)

    Romanchuk said Tuesday he’s facing resistance from his counterparts on the Senate Energy and Public Utilities Committee as far as repealing the coal plant bailouts.

    “You need votes to get it out of committee; the votes probably aren’t there right now,” he said to reporters after a hearing.

     State Sen. Mark Romanchuk, R-Ontario. Official photo.

    “The legislation has some other things in it like refunds that are probably, in the minds of committee members, not what they want to vote for.”

    Earlier this year, representatives of the utilities that comprise the Ohio Valley Electric Corp., which owns the two plants, appeared before the committee to argue in favor of the subsidies.

    Senate Energy Chairman Rob McColley, R-Napoleon, said Tuesday he has no update on timing regarding a vote to repeal the coal bailouts. He said Romanchuk is working behind the scenes to prepare the bill for a vote, but he’s not involved in specific details.

    “You know how I feel about House Bill 6. I voted no because I thought it stunk from the very beginning,” he said. “But at the same time, we’ve got to work this through the committee process and that’s what we’re trying to do.”

    Tuesday’s hearing: solar credits

    The Senate Energy and Public Utilities Committee met Tuesday to consider Senate Bill 118, a Romanchuk bill that would repeal a lesser-discussed piece of HB 6: a $20 million annual credit, funded by utility customers, for certain solar projects.

    Franklin County Common Pleas Judge Chris Brown halted collections over nuclear and solar subsidies under HB 6 via an injunction in December, according to PUCO spokesman Matt Schilling. However, in April, Brown issued a ruling allowing the solar fund collections to begin on Nov. 1, 2021.

    SB 118 has support from opponents of HB 6: the conservative group Americans for Prosperity, the Ohio Manufacturing Association, and the Ohio Consumers Counsel, which represents ratepayers.

    Lobbyists representing OMA and AFP described the credit structure as a form of cronyism, alleging HB 6 was narrowly tailored to ensure the payments made it to a select few solar projects.

    A spokeswoman from the Ohio Air Quality Development Authority, which oversees the solar credit program, confirmed collections from consumers won’t begin until Nov. 1. Five projects in Highland, Brown, Hardin and Vinton counties have been approved to receive payments within the program.

    Householder update

    Householder was arrested and indicted in July 2020. Lawmakers ousted him as Speaker of the House shortly thereafter. He was expelled as a member of the Ohio General Assembly in June of this year.

    He has maintained his innocence throughout. He’s scheduled to appear for a status conference before a federal judge Oct. 5.

    “I have not, not have I ever, taken a bribe or solicited or been solicited for taking a bribe. Never,” Householder said.

    Two alleged Householder co-conspirators — his political strategist Jeff Longstreth and lobbyist Juan Cespedes — pleaded guilty in October 2020 to one count each of racketeering. Neil Clark, a high power GOP lobbyist, was charged as well. He died by suicide earlier this year.

    In July, FirstEnergy admitted in court documents that it paid $61 million into an account that Householder controlled to pass HB 6. The company agreed to pay a $230 million penalty and plead guilty to a charge of wire fraud.

    The documents state the company paid $22 million to Sam Randazzo, an energy lawyer appointed by Gov. Mike DeWine to lead the PUCO, in the decade before his appointment. This includes a $4.3 million payment just before he assumed the post.

    In return, Randazzo allegedly used his chairmanship to shield PUCO from regulatory scrutiny that could cost it hundreds of millions. Randazzo denied any wrongdoing and has not been charged with a crime.