Sierra Club attacks Ohio plans that would protect coal plants

The Sierra Club said Aug. 5 that it is taking to the streets of downtown Columbus, Ohio, with new kiosk ads calling out utilities for trying to keep “outdated coal plants” in operation by charging electricity customers in cases pending before the Public Utilities Commission of Ohio (PUCO).

Statewide online ads accompany the curbside kiosk ads. Following a press event outside the PUCO, the Sierra Club also delivered 1,500 petitions to the commission as part of the new “No Coal Bailouts” campaign.

The campaign focuses on Columbus-based American Electric Power (NYSE: AEP), Duke Energy (NYSE: DUK) and Akron-based FirstEnergy (NYSE: FE). While most states are focusing new investments in clean energy, Ohio utilities are increasing their reliance on dangerous fossil fuels following the passage of Senate Bill 310, a new law that the club says guts Ohio’s renewable energy and energy efficiency standards.

“These utilities are essentially asking for a blank check to bail out their dirty, aging coal plants at the expense of customers, the environment and public health,” said Daniel Sawmiller, senior campaign representative for the Sierra Club’s Beyond Coal campaign. “We are urging the PUCO and Governor [John] Kasich not to make Ohioans pay more every month for dirty coal plants.”

The club said that AEP is seeking to charge Ohio customers an estimated $117m to bail out two coal plants that were built in the early 1950s – Kyger Creek and Clifty Creek. These coal plants are not competitive with today’s market prices for electricity, the club claimed. AEP owns interests in both plants, through Ohio Valley Electric Corp., and operates them. The measure, if approved by the PUCO, would guarantee AEP a revenue stream for these aging coal plants, forcing other electricity to compete in an unfair market that benefits AEP and makes customers’ electric bills higher than they should be, the environmental organization said.

Duke Energy has requested a similar bailout (a Power Purchase Agreement rider) for its coal plants, but for an even longer period of time, the club added. FirstEnergy also filed an Aug. 4 request for a rider to continue operating its Sammis coal plant and Davis Besse nuclear plant, plus take some power from both Kyger Creek and Clifty Creek.

Companies pursue electric security plans at the PUCO

On May 29, Duke Energy Ohio filed with the PUCO a still-pending electric security plan (ESP) that said in part: “Duke Energy Ohio proposes a non-bypassable rider, Rider PSR (Price Stabilization Rider), through which it will provide to customers the net benefit of all revenues accruing to the Company as a result of its ownership interest and contractual entitlement in the Ohio Valley Electric Corporation (OVEC), less all costs associated with said entitlement. The Company further proposes Rider PSR as a rider in which additional contractual arrangements could be included to increase the benefits available to customers.”

Again, OVEC owns the Kyger Creek and Clifty Creek coal plants.

Said Duke Energy Ohio President James Henning in May 29 supporting testimony: “Duke Energy Ohio will confinue to sell its nine percent entitlement from the OVEC-owned generating facilities into the wholesale market administered by PJM. The Company will then net this revenue against the cost charged by OVEC, with the resulting amount passed through to customers via a non-bypassable rider. In a rising price environment, the Company’s margins from its contractual entitlement will be positive and the net amount passed through the rider should similarly increase. In this circumstance, therefore, as higher market prices for capacity and/or energy serve to increase retail prices for the same service, customers will receive the benefit derived from the increasing profitability of selling OVEC’s generation as a favorable hedge that serves to mitigate the volatility of overall generation rates.”

Henning said that with thousands of MWs of mostly coal-fired capacity due to shut in the region in the next few years due to clean-air needs, this plan will serve to protect ratepayers from a volatile power market.

The Ohio Power unit of AEP also has an electric security plan case pending at the PUCO and in a July 23 post-hearing brief said about its proposal: “The PPA Rider would reflect the net benefit of all revenues accruing to AEP Ohio from the sale of its OVEC contractual entitlement into the PJM market (including energy, capacity, ancillaries, etc.) less all costs associated with the Company’s OVEC entitlement. None of the energy or capacity associated with the Company’s OVEC entitlement would be bid into the auctions conducted to procure generation services for or used to offset any of the [standard service offer] load included in the auction.”

Ohio Power added: “Due to the relative stability of OVEC’s costs as compared to market based costs, this rider will smooth out market fluctuations and rise and fall in a manner that is counter to the market – increasing rate stability for all customers.”

Ohio Power has a 19.93% share of the OVEC power participation benefits and requirements. Annually, OVEC provides over $40m of economic benefit in its six-county region and over $100m of economic benefit in Ohio, the utility added.

OVEC operates the Kyger Creek plant in Cheshire, Ohio, which has a nameplate capacity of 1,086 MW. It also operates the Clifty Creek in Madison, Ind., with a nameplate capacity of 1,304 MW. OVEC and its owners operate under an Amended and Restated Inter-Company Power Agreement effective in 2011 and extending through June 2040.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.