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Ratepayers are seeing credits on electric bills after paying for controversial coal plant subsidies

OVEC and IKEC sign on floor of Kyger Creek Plant in Gallia County. (September 2019)
Andy Chow
Statehouse News Bureau
OVEC and IKEC sign on floor of Kyger Creek Plant in Gallia County. (September 2019)

Two coal plants, that have needed hundreds of millions of dollars in subsidies from Ohio ratepayers, have churned out a profit in the last energy auction which will result in a credit on ratepayers’ electric bills.

Marc Reitter, AEP president and COO, said inflation and volatility of other energy sources created a scenario in which the coal plants could sell into the electric market with a net benefit.

“It's a credit now to bills, and it's going to continue to be a credit. As you see, power prices and natural gas prices continue to climb,” Reitter said during a forum hosted by the Columbus Metropolitan Club.

The credit from OVEC went into effect in July. AEP customers are seeing an 11-cent credit. Customers with AES, formerly known as Dayton Power & Light, will see a five-cent credit. The Public Utilities Commission of Ohio said the credits for customers around the state range from five cents to 27 cents.

Environmental and consumer advocates have been vocal critics of the OVEC subsidies, which were extended in Ohio’s controversial energy bill, HB6.

The Office of the Ohio Consumers’ Counsel said the credit is the result of an over-collection on the part of utilities.

J.P. Blackwood, spokesperson for Ohio Consumers’ Counsel Bruce Weston, said their “preliminary analysis is that the consumer bill credit is only to remedy past utility overcharges for the coal plants and not that the coal plants became economical. To date, Ohioans have been charged tens of millions of dollars to subsidize AEP, Duke and AES for the coal plants.”

Opponents of the subsidies have argued that ratepayers should not be on the hook to keep coal plants open at a time when policymakers are trying to cut down on carbon emissions.

“Customers have spent hundreds of millions on OVEC over the years and are only now — in a moment of historic inflation, ongoing pandemic issues, and a major war in Europe — seeing an 11-cent savings,” said Neil Waggoner, Ohio senior campaign representative for the Sierra Club's Beyond Coal campaign.

The subsidies for OVEC appear on electric bills from Ohio utility companies as a Legacy Generation Rider. OVEC is a collective, with Ohio utilities as shareholders, for two coal plants; Kyger Creek in Gallia County, and Clifty Creek in Madison, Indiana. The new energy law also caps that rider at $1.50.

Since HB6 went into effect, the Legacy Generation Rider has collected more than $186 million from ratepayers between 2020 and 2021 and the credit from the first half of 2022 will total about $14 million, according to data from the PUCO.

AEP said the credit could reach as much as $1 a month by January.

"The mechanism is set up as a financial hedge. So there will be periods, and there have been periods, there will be a cost to customers, but it's that hedge and that protection to customers in the event you have what's happening right now when you have spikes in natural gas and power prices, that OVEC is returning money to customers," said Reitter.

HB6 is at the center of Ohio’s largest corruption scandal. Federal investigators have accused former House Speaker Larry Householder, a Republican, and others, of running a bribery scheme through a dark money group largely funded by FirstEnergy.

FirstEnergy has admitted to bribing Householder and former PUCO chair Sam Randazzo in exchange for preferential regulatory treatment and the passage of legislative goals, such as the nuclear power plant bailout found in HB6.

Householder and co-defendant Matt Borges, former Ohio Republican Party chair and FirstEnergy lobbyist, have pleaded not guilty. Randazzo has not been charged with a crime and has said he did nothing wrong.

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