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Ohio Hands Electricity Consumers a Win, Puts Dirty Energy on Notice

Feb. 25, 2015

Ohio Hands Electricity Consumers a Win, Puts Dirty Energy on Notice

Statement of Allison Fisher, Outreach Director, Public Citizen’s Energy Program

We applaud the Public Utilities Commission of Ohio’s (PUCO) decision today to deny American Electric Power Company’s (AEP) proposal to put ratepayers on the hook for one of the utility’s aging and uncompetitive coal plant.

The decision sends a strong signal that bailouts for dirty energy facilities at the expense of ratepayers and more cost-effective energy sources will not be sanctioned by Ohio regulators.

The proposed power purchase agreement, which would have locked in guaranteed profits for AEP’s share of the Kyger Creek Plant for the next 25 years, may have served as a bellwether for several other proposals on the table. Those are a more expansive proposal submitted in the fall by AEP that would cover four coal plants, a proposal by Duke Energy for ratepayers to cover the company’s share of Kyger Creek, and FirstEnergy’s plan to prop up its coal-fired W.H. Sammis plant and its troubled Davis Besse nuclear power plant.

Allowing utilities to charge consumers for the cost of operating the plants above the market value of the electricity generated would set a dangerous precedent. By and large, deregulating energy and creating competitive power markets have not delivered the benefits to consumers that proponents promised.

However, in this case, the market is doing what it is supposed to do – pushing out uncompetitive and inefficient generators. And now utilities like AEP that favor the benefits of the market but want none of the risks are trying to change the rules by asking regulators to guarantee that their oldest, dirtiest and most uneconomical power plants make a profit.

In addition to being a bad deal for Ohio electric consumers, giving Ohio’s utilities’ a bailout for power plants that are no longer economically feasible is bad public policy. It also poorly positions Ohio to meet imminent federal carbon reduction goals.

This year, the U.S. Environmental Protection Agency will finalize carbon reduction goals for power plants. The current proposal sets a 28 percent emissions reduction target for Ohio by 2030. This is a critical step in U.S. climate action at a time when the world’s top climate scientists are urgently warning the global community to radically reduce our dependency on fossil fuels. This is a time for forward-thinking action, not a time to lock Ohioans into subsidizing dirty energy.

According to polling conducted by Public Policy Partners, an overwhelming percentage of Ohio electricity customers favor clean renewable energy sources and do not support paying more to keep aging dirty plants operating. These results are reflected in the several thousand comments submitted by residents to the PUCO opposing the proposed bailouts and the hundreds of concerned citizens who have packed public hearings to voice their outrage at attempts to saddle consumers with the financial risk of Ohio’s oldest and dirtiest power plants.

PUCO has taken the first step in protecting consumers from unnecessary and costly coal and nuclear bailouts. Now regulators must reject similar schemes by Duke Energy and FirstEnergy along with AEP’s more sweeping proposal.