Proposed financial bailouts for nuclear power plants in Ohio and Pennsylvania are raising questions as to whether those facilities can compete on their own against coal and natural gas. Others, though, laid blame on subsidies and mandates for renewables like wind and solar, saying governments should never have picked energy winners and losers in the first place.
"Subsidies of any kind aren’t good," said Dan Kish, a senior fellow at the Institute for Energy Research. “But it’s a little hypocritical for people to support or ignore subsidies for politically protected classes of energy development and then argue that other forms of energy that don’t have the same political protections should be allowed to go away.”
Lawmakers in Ohio are currently considering a bailout worth about $200 million a year, with half of that money going to two nuclear power plants and the rest going toward expanding the state’s clean energy resources. An Ohio House committee voted along party lines Thursday to move the legislation forward.
FirstEnergy Solutions, which runs the Davis-Besse nuclear plant near Toledo and the Perry plant near Cleveland, has said it would close both facilities by 2021 unless a buyer is found or the government subsidizes operational costs. The most recent version of the legislation would raise money from a $2.50 surcharge on all residential electric bills, a $250 increase on industrial users, and additional fees for commercial and business customers.
In Pennsylvania, a $500 million bailout stalled in the Senate when lawmakers adjourned earlier this month without a vote. The legislature may take the issue up again in the fall, but that will be too late for one of the state’s five nuclear power plants. Exelon Corp. has said it will commence shutdown of Three Mile Island outside of Harrisburg on June 1, after warning for two years that it would take such drastic action without financial assistance from the state.
Glen Thomas, former chairman of the Pennsylvania Utility Commission, though, said he doesn’t see a compelling argument for giving nuclear plants the bailout. The competitive electricity markets in the state have worked well with prices in 2016, for example, the lower in the history of the PJM grid, which operates the 13-state transmission grid of which Pennsylvania is a part.
"The reason it works is because one, consumers are empowered and have the ability to choose; and two, the state has generally not interfered with the competitive markets,” said Thomas, who is now president of the GT Power Group. “It’s really a policy decision: do they want to stay committed to a very successful competitive model or go back to the day when the state was doing all the planning, trying to dictate from Harrisburg where Pennsylvanians are getting their electricity from.”
Pennsylvania is the third-largest coal producing state, but that industry has been hard hit by the fracking and natural gas boon as well as the subsidies given to renewable energy sources. Additional subsidies to nuclear power will further hit coal producers.
"Subsidizing nuclear power in Pennsylvania, a state that participates in a 13-state regional transmission organization and competes within that organization, will threaten the viability of the remaining coal electric generating units in those states and put at risk the reliable and resilient electricity that is delivered to 65 million people, all at the expense of Pennsylvania ratepayers,” said Rachel Gleason, executive director of the PA Coal Alliance.
The American Coalition for Clean Coal Electricity weighed in with letters to the Pennsylvania House and Senate committees considering the bailouts, stating that the extra help to nuclear plants could “cause more premature coal retirements.” The coalition recommended establishing a “market-based mechanism to value fuel security” that would help both coal and nuclear power.
Although New York, Illinois, and New Jersey have already approved bailouts for nuclear power, Pennsylvania is the first state where the coal industry has weighed in.
The head of the Ohio Coal Association said they are closely monitoring the legislation there, which so far has been “acceptable” to the coal producers. He acknowledged that the details of legislation and on-the-ground situations vary state-to-state, making for a complicated industry response.
“We’re already competing with nuclear, but it’s very unlikely that any more nuclear power plants will be built in Ohio,” said association President Mike Cope. “We’ve been hammered by federal regulations that have caused us to be less and less competitive in the markets, but anyone who thinks solar and wind are going to make up for what nuclear and coal do is barking up the wrong tree.”
FirstEnergy, which filed for bankruptcy in 2018, has put significant resources into lobbying the Ohio legislature. Despite the bankruptcy, the company contributed $124,300 to Ohio Republican Gov. Mike DeWine, who appointed a former FirstEnergy lobbyist to oversee his administration’s legislative affairs. The company also donated more than $200,000 to House Speaker Larry Householder and candidates who supported his speakership.
According to the left-leaning Energy and Policy Institute, the company spent approximately $3 million paid to a number of lobbying and public relations firms building support for the legislation. The institute found that a lobbyist, Christopher Curry of Dewey Square Group, working for FirstEnergy, was revealed in document metadata to be the author of seven testimonies before the Ohio House, including those of plant employees, a county commissioner, and a township administrator.
According to the U.S. Energy Information Administration, nuclear power supplied 42 percent of Pennsylvania’s electricity in 2017 while Ohio’s two facilities combined powered by 15 percent of the state’s net generation. Meanwhile, renewable energy sources are barely making headway in fulfilling the promise of the state’s mandates. Pennsylvania’s goal is to have 18 percent of its electricity come from renewables by 2021. By the end of 2017, solar was just 0.2 percent of its overall portfolio.
“If we’ve got this larger goal of having more clean electricity then how are we going to get it?” asked Matt Crozat, senior director for Strategy and Policy Development at the Nuclear Energy Institute. “What we see in a lot of state programs is that we pay extra for renewables because they provide clean electricity. Nuclear was never included in those despite the fact that they’re the largest source of clean power in our systems.”
Through 98 reactors in 30 states, nuclear power accounts for 20 percent of the country’s electricity, all of it emissions free, according to the Nuclear Energy Institute. But Three Mile Island, the central Pennsylvania plant slated to cease operations on Sept. 30, was the site of the nation’s worst nuclear accident in 1979 when the reactor 2 experienced a partial meltdown. Safety concerns about nuclear plants continue to worry many, which accounts for the difficulty operators have in opening new facilities.