Dayton Power and Light offers plan to protect power plants in Ohio

Dayton Power and Light (DP&L), a subsidiary of AES Corp. (NYSE: AES), on Feb. 22 filed a power plant-protecting Electric Security Plan (ESP) with the Public Utilities Commission of Ohio (PUCO).

DP&L said its plan is designed to protect customers from volatility in energy prices while promoting economic development by allowing its power plants to continue operations. The power plants account for almost 19,000 direct and indirect Ohio jobs and millions of dollars in annual federal, state and local taxes.

“Right now, DP&L is concerned that customers are not assured price stability and a reliable energy future,” said Tom Raga, DP&L President and Chief Executive Officer. “A combination of short-term market conditions and new environmental regulations has placed DP&L’s fully environmentally-compliant plants at risk for premature closure. Our plan keeps Ohio power plants operating, protects our customers from price volatility, and provides fuel-diversity all while preserving Ohio’s jobs and tax base.”

The plan includes all of DP&L’s co-owned plants, preserving almost 19,000 direct and indirect jobs and nearly $190 million in annual taxes, including property taxes paid to local schools and governments. Over the life of the 10-year plan, the power plants will contribute an estimated $26.5 billion in positive economic benefits for Ohio.

This plan is similar to controversial plans already pending at the PUCO from American Electric Power (NYSE: AEP) and FirstEnergy (NYSE: FE) to protect mostly coal-fired capacity through firm contracts for that power paid for by customers of the regulated Ohio electric utility subsidiaries of those companies. Due to deregulation in Ohio, the regulated utilities no longer own generation.

The proposed plan for DXP&L includes a new charge that will appear on all customer bills the purpose of which is to ensure the reliability of electric supply in Ohio. Each year, that charge will reset based on actual market conditions and will be reviewed by the PUCO. Over the life of the plan, the charge is projected by an independent third party to decrease and become a credit to all customer bills, moderating prices. If approved as proposed, starting in the first year (2017) the charge for DP&L’s average residential customer’s total bill, using 1,000 kilowatt hours per month is $1.21 or approximately a 1% increase.

“DP&L has always been committed to providing reliable energy at competitive prices, while investing in and supporting the communities where we live and work,” Raga said. “If our power plants are forced to close prematurely, Ohioans will have fewer sources of reliable electricity generation, fewer jobs, lost tax revenues and higher electricity prices. This plan reaffirms our commitment to the community, and we are confident it addresses the needs of the region and DP&L.”

Dayton Power and Light is the principal subsidiary of DPL Inc. (DPL), a regional energy provider and an AES company. DPL’s other significant subsidiaries include AES Ohio Generation LLC. Dayton Power and Light, a regulated electric utility, provides service to over 515,000 customers in West Central Ohio. AES Ohio Generation engages in the operation of merchant peaking generation facilities. DPL, through its subsidiaries, owns and operates approximately 3,000 MW of capacity, of which 2,000 MW are coal-fired units and 1,000 MW are solar, natural gas, battery storage and diesel peaking units.

Dayton’s ESP would have a term of Jan. 1, 2017, through Dec. 31, 2026. Said the application to the PUCO: “Baseload generation plants are critical to Ohio’s economic stability because they are necessary to ensure the reliability of the electric grid, ensure fuel diversity of Ohio generation plants, keep prices low and produce millions of dollars of economic benefits in the state and in the local communities. DP&L currently owns generation assets, which the Commission has ordered DP&L to transfer to an affiliate by January 1, 2017 (the ‘plants’). Due to adverse conditions in the energy and capacity markets, and a series of new and upcoming environmental regulations, those plants are at risk of closure, and will remain at risk after DP&L transfers them to an unregulated affiliate (‘Ohio Genco’).”

The plants are:

  • Stuart Station Units 1-4, 2,308 MW total, 808 MW DPL share;
  • Zimmer Unit 1, 1,320 MW total, 371 MW DPL share;
  • Miami Fort Units 7 and 8, 1,020 MW total, 368 MW DPL share;
  • Killen Unit 2, 600 MW total, 402 MW DPL share;
  • Conesville Unit 4, 780 MW total, 129 MW DPL share; and
  • Ohio Valley Electric Corp.’s (OVEC) Clifty Creek Units 1-6 and Kyger Creek Units 1-5, 2,109 MW total, 103 MW DPL share.

More details by plant are:

  • Stuart and Killen – The Stuart Station includes four coal-fired units and a diesel unit with a combined nameplate rating 2725 MVA and maximum MW output of 2,328 MW. The Killen Station includes one coal-fired unit and a combustion turbine with a combined nameplate rating of 767.7 MVA and maximum MW output of 630 MW.
  • Zimmer Generating Station – Zimmer includes one coal-fired unit with a nameplate rating 1,755 MVA and maximum MW output of 1,300 MW.
  • Miami Fort Generating Station – Miami Fort includes two coal-fired units with a combined nameplate rating of 1,253 MVA and maximum output of 1,020 MW.
  • Conesville Power Plant – Conesville includes the coal-fired Unit 4 with a nameplate rating of 935 MVA and maximum MW output of 780 MW.
  • Clifty Creek Power Plant and Kyger Creek Generating Station – Clifty Creek includes six coal-fired units, and Kyger Creek Station includes five coal-fired units. Those plants have a combined nameplate rating of 2,398 MVA and maximum MW output of 2,169 MW. Notable is that the shares of OVEC held by AEP and FirstEnergy are part of the ESPs of those companies, as well.
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.