Despite a surge in the number of electricity-hungry data centers opening in central Ohio, the coal-fired power plants owned by Ohio Valley Electric Corp. (OVEC) are no closer to profitability, according to a report from the bond rating agency Fitch.
“While regional demand growth (especially from data centers) may tighten energy markets, Fitch expects OVEC’s all-in costs to exceed prevailing merchant power prices, making the plants uneconomical for the foreseeable future,” the rating agency said in a report released Friday.
Fitch gave the OVEC bonds a BBB- rating, which is on the lower end of the fourth tier of ratings. Fitch rates bonds on a scale ranging from AAA at the top to D at the bottom.
OVEC benefits from HB 6, a 2019 Ohio law that requires electric ratepayers to subsidize the operations of the company’s two 70-year-old coal-fired power plants – Clifty Creek in Indiana and Kyger Creek in Ohio.
HB 6 was passed after then-Ohio House speaker Larry Householder benefited from a $61 million campaign to bribe him and pass the law. Householder and former Ohio Republican Party chairman Matt Borges were convicted of federal corruption charges in 2023 and are serving 20- and 5-year sentences respectively.
Corrupt law benefits OVEC’s operations
Fitch said its rating was based on the guarantee to OVEC provided by HB 6: “H.B. 6 (2019) further codified the ability of Public Utilities Commission of Ohio (PUCO) regulated utilities to recover OVEC costs,” its report said.
An audit into OVEC’s operations authorized by HB 6 concluded that the company wasn’t making a profit on the coal plants and that it would be cheaper for OVEC to build and operate new gas-fired plants.
A series of emails between officials at Duke Energy, one of the companies that shares ownership of OVEC, showed that the plants were losing between $150,000 and $175,000 a day in April 2020.
Expert testimony about costs stricken from PUCO record
The high costs of OVEC’s plants are no secret to regulators, utilities and outside analysts.
In January 2022, attorneys for AEP, which owns the largest share of OVEC, filed a successful motion to strike testimony from the record of a rate case involving the OVEC plants. Analyst Devi Glick, who testified for the Ohio Consumer’s Counsel, filed evidence showing that OVEC’s “costs are substantially higher” than other power generators.
Glick also testified that OVEC’s costs would continue to be higher than other providers, a point supported by Fitch’s latest report. PUCO agreed with AEP’s motion to strike Glick’s correct testimony from the record.
A Checks & Balances Project report earlier this month showed that PUCO routinely grants utilities’ requests to strike negative testimony from the record.
Ray Locker is the executive director for Checks & Balances Project, an investigative watchdog blog holding government officials, lobbyists, and corporate management accountable to the public. Funding for C&BP is provided by Renew American Prosperity and individual donors.
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