New version of HB 6 still bails out FirstEnergy’s profitable power plants

FirstEnergy Facts by Dick Munson of EDF:

Thursday, July 11, 2019 - Edition #71

Rate shock

FirstEnergy and its legislative supporters argue constantly that HB 6 will save Ohioans money. Really? How would spending almost a billion dollars to bail out a publicly-traded utility’s uneconomic coal and nuclear power plants save taxpayers and ratepayers money? 

Ned Hill, a distinguished Ohio State University professor, calculated that even with a revised Senate version of the bailout bill, “electricity costs will still increase in Ohio.” The Ohio Consumers Council, created by law to protect Ohioans from monopolies, testified “The bill will transfer about a billion dollars in above-market charges from Ohio families and businesses to FirstEnergy Solutions’ investors. That is bad. The bill similarly will allow the continued bailout of the two OVEC coal plants, at a total consumer cost of about $300 million. … That is also bad.”

So, when it comes to determining if public subsidies will cost you money — do you trust the recipients of those subsidies or an economics professor and independent consumer advocate? If you chose the first, prepare for a rate shock.

Deadline? Just kidding

FirstEnergy Solutions has screamed for months that Ohio legislators had to give them a billion dollar bailout by the end of June or they’d close their power plants. Well, that date has come and gone, and guess what? FirstEnergy suddenly is fine to wait. 

Makes you wonder — if June 30 was a soft deadline, could the demand for $150 million per year be equally soft?

Profitable? Depends on who we’re talking to

FirstEnergy Solutions says it needs at least $150 million annually or it will close power plants. When upstart legislators ask for some justification, the company claims it can’t say, arguing, erroneously, that it can’t reveal such specifics because it is in bankruptcy.

Yet when FirstEnergy Solutions talks to the bankruptcy court, it offers specific financial numbers and quietly admits that its nuclear generation business is doing fine, thank you very much. According to the report, FirstEnergy’s nuclear generation subsidiary had a positive operating margin of $1.8 million in May and, since the bankruptcy filing, it had a positive operating margin of $55.3 million. 

Back to wondering – why does this profitable company need a bailout?

Keep collecting dues

The Ohio Supreme Court recently ruled that FirstEnergy illegally received hundreds of millions of dollars from consumers and that the Public Utilities Commission of Ohio needed to immediately stop these no-strings-attached payments. Although the payments were illegally obtained, the state’s utilities had previously lobbied for legislation that prohibited refunds, allowing FirstEnergy to keep its ill-gotten gains. Demonstrating again its appetite for endless subsidies, FirstEnergy just asked the Supreme Court to reconsider its decision, hoping to delay any PUCO action so it can continue collecting illegal payments. 

A good gig if you can get it.