Utilities in Ohio, Illinois and New York have filed proposals with state regulators and legislators to increase customers’ bills to prop up their aging coal and nuclear plants. The bailout proposals seek to guarantee the utilities profit at the expense of ratepayers and clean energy.
More than Higher Electricity Bills
The bailouts would result in higher bills for customers, but that’s not all. They also would:
- Guarantee that some of our country’s dirties and dangerous power plants stay online;
- Reduce customer electricity choices and consumers’ ability to purchase electricity at the lowest possible price;
- Undermine the deployment of renewable energy; and
- Reward utilities for bad business decisions
How the Bailouts Work
In Ohio: Power plant owner, FirstEnergy asked the Public Utility Commission of Ohio (PUCO) to allow them to set up Power Purchase Agreements with the state’s distribution utilities, in which the utilities must enter into long-term contracts to buy electricity from their subsidiaries’ power plants at fixed prices that would guarantee profits for the plants. This $4 billion consumer-backed proposal, was approved by PUCO in March 2016, but quickly rejected by federal regulators for hurting ratepayers and distorting energy markets.
FirstEnergy then reworded the proposal to circumvent FERC jurisdiction. Ultimately, PUCO approved a $600-million electricity rate plan for FirstEnergy - just 5 percent of the utility’s revamped request.
What Happens Next in Ohio: Lawsuits will ask the Ohio Supreme Court to consider whether the $600-million rate plan is legal. FirstEnergy will likely seek a legislative strategy to prop up its failing dirty power plants.
In Illinois: For the past several years, mega-utility, Exelon has been pushing legislation that would hike electricity rates to guarantee a profit for its fleet of uneconomical nuclear reactors. Legislation in the 2015 and 2016 regular assembly sessions that would have propped up those plants, rightfully failed.
However, Exelon is now floating a new scheme that recalls the nuclear bailout it was awarded in New York State in August 2016. The scheme would calculate subsidies for the nuclear plants and incorporate a social cost of carbon dioxide emissions as the baseline for rewarding the nukes for their lack of emissions with adjustments based on market conditions – costing ratepayers across the state millions a year.
What Happens Next in Illinois: Exelon is campaigning for legislative passage of its plan in the General Assembly’s special veto session in November 2016. If the plan fails, Exelon could push re-regulation of state power markets to save their fleets.
In New York: In August 2016, New York regulators - at the bequest of the Cuomo Administration – approved a plan to hike New Yorkers’ electric utility bills by an estimated $7.6 billion in order to bail out three failing nuclear plants in the state. Exelon is the owner of two of the plants and the prospective buyer of the third – the sale is contingent on Exelon receiving subsidies to keep the plant operating profitably and approvals from state and federal regulators. The plan institutes a Clean Energy Standard that subsidizes nuclear power.
What Happens Next in New York: In October 2016, a collection of energy companies and trade associations filed a lawsuit in Federal District Court in Manhattan arguing that the state overstepped federal authority to regulate energy prices. The New York Public Service Commission, the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission must all approve the sale of Entergy’s FitzPatrick Nuclear Plant to Exelon.
Stopping the Bailouts in New York: Public Citizen is part of the Stop the Cuomo Tax coalition calling on the New York State Governor to halt the plan to mandate ratepayer subsidies for nuclear power plants in upstate New York. Public Citizen is challenging the sale of the FitzPatrick Nuclear Plant in the FERC proceedings.