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Friday, August 18, 2017

With Final Approval, FirstEnergy to Continue Receiving More Than $600 Million in Subsidies

Posted By on Fri, Aug 18, 2017 at 9:21 AM

After several years of ongoing debate and a formal decision last fall, the Public Utilities Commission of Ohio has given final approval to more than $600 million in subsidies to FirstEnergy.

Last October's PUCO decision prompted a number of appeals and challenges from environmentalist organizations who opposed the massive "bailout" meant to prop up nuclear and coal-powered plants. The core argument is that subsidies should flow toward more competitive and renewable sources of energy in Ohio.

The Environmental Defense fund quoted PUCO chairman Asim Haque himself, who said that the funding plan was "undoubtedly unconventional." EDF went on to underscore that the PUCO/FirstEnergy decision may set precedent for the electricity industry, where failing power plants are becoming a topic of rigorous debate.

Even FirstEnergy itself challenged the initial ruling, seeking an even greater subsidization program. (The company has said that its credit rating would have fallen below investment grade had PUCO not intervened.) Today, PUCO halted those challenges.

FirstEnergy began collecting the public dollars in January, and will continue to do so through at least 2019.

What that means for Ohio energy customers is an extra $43 on average per year on the electric bill to fund this subsidization program. (This estimate is based on the 2015 average of 901 kilowatt hours of electricity used per month in a household in the U.S.)

What FirstEnergy ends up doing with that extra cash remains to be seen in full. EDF points out that PUCO was close to ordering a specific "grid modernization" program from FirstEnergy; rather, these hundreds of millions of dollars seem to have no clear objective attached to them.

From EDF:

These “out-of-market constructs” being debated in Ohio would distort price signals in the electricity market and lead to “a really, really unsustainable future.” The outcome will signal whether electricity markets rely on competition or monopolies, on markets or subsidies.

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