The utilities that share ownership of the Ohio Valley Electric Corp. (OVEC) have closed all or some of the units at 28 coal-fired power plants since 2010, citing environmental concerns, high costs and age as some of the reasons for their closing, a Checks & Balances Project analysis shows.
The closures removed at least 22,527 MW of generating capacity at the plants, which are all located in the area serviced by the PJM regional transmission organization, which serves Ohio and a variety of Midwestern and Mid-Atlantic states.
Yet these same utilities, known as the sponsoring companies, continue to keep open OVEC’s two coal-fired power plants – the Clifty Creek and Kyger Creek facilities – even though they have the same pollution problems, high costs and aging parts as the plants that were closed.
That’s because Ohio’s HB 6 law incentivizes OVEC and the utility owners of the OVEC plants to maintain their uneconomic, polluting status quo at customer expense. The law, passed after utility interests bribed Ohio House speaker Larry Householder, also allows the two power plants to run at will and send its electricity to the power grid even if cheaper power is available.
An audit into the effects of HB 6 has shown that OVEC has overpaid for coal, lost money on the electricity it supplies the grid and could replace its coal plants with those that burn natural gas for less money. That’s despite continued attempts by OVEC and the sponsoring companies to limit public access to key parts of the audit.
The sponsoring companies are the utilities that banded together in the 1950s to create OVEC to supply electricity to power a nuclear enrichment plant in Piketon, Ohio, operated by then U.S. Atomic Energy Commission. After the Piketon plant closed, OVEC sold the electricity generated by its two plants on the open market.
Closed plants
The profiles of many of the closed plants fit the profile of the two OVEC plants. For example, Duke Energy’s Killen and J.M. Stuart coal plants in Adams County, Ohio, closed in 2018 after the Sierra Club negotiated their closing with Duke, which said in filings with the U.S. Securities and Exchange Commission that the two plants were losing money and would never be profitable.
The ongoing audit of the OVEC plants by London Economics International (LEI) has concluded that Clifty Creek and Kyger Creek lost money during 2020 and may not be profitable without the subsidies provided by HB 6.
Emails between officials at Duke Energy, one of the OVEC sponsoring companies, showed that the OVEC plants were losing between $150,000 and $175,000 a day in April 2020.
FirstEnergy, the Akron-based utility that led the fight for HB 6, has closed two of its largest coal plants in 2019 and 2020 — the Bruce Mansfield and W.H. Sammis plants. Both were losing money, FirstEnergy reported in its SEC filings, and both faced federal environmental sanctions.
Both plants had longstanding environmental issues, including violations of mercury and air toxics standardsand excessive sulfur dioxide and nitrogen oxide pollution.
Instead of borrowing more money to fit its plants with pollution-control equipment, FirstEnergy closed them, which removed the plants from production.
That, however, has not happened with OVEC and its Clifty Creek and Kyger Creek power plants. OVEC has borrowed more than $1 billion to install scrubbers to limit emissions even though it was clear that coal-fired plants were on the decline.
If the plants don’t run at will, they won’t generate revenues that enable the companies to pay off their debt. The law also says that if OVEC decided to prematurely shutter Clifty Creek and Kyger Creek, the company’s owners would not receive any help to pay off OVEC’s debt. So, OVEC keeps the plants running at will and generating electricity that costs far more than that produced by other plants knowing that Ohio ratepayers will have to cover the costs.
SEC filings from the sponsoring companies note that they are the hook for paying off OVEC’s debts.
For example, AES Ohio, which owns 4.9 percent of OVEC, said in a 2023 SEC filing that “as of June 30, 2023, AES Ohio could be responsible for the repayment of 4.9%, of $53.7 million, of $1.1 billion OVEC debt obligations if they came due.”
So far, regulators in the states served by the utilities that own OVEC have allowed the company’s operations to continue. But there are signs that is changing. Michigan’s Public Service Commission issued a Section 7 warning to Indiana & Michigan Power, an OVEC owner, that called its power costs “uneconomic.”
FirstEnergy and Husted reversals
Earlier this month, FirstEnergy reversed its plan to close two coal-fired plants in West Virginia by 2030, saying the Fort Martin and Harrison plants could not be replaced by other generating sources in time.
Also, Ohio Lt. Gov. Jon Husted, a longtime coal industry ally and supporter of indicted utility regulator Sam Randazzo, said HB 6 has outlived its usefulness and should be repealed.
“I think that anything that was connected to House Bill 6 needs to be completely removed,” Husted told reporter Natalie Fahmy of WCMH. “The people who are accountable for it are being held accountable, some are already being convicted. We would all be better off if we just stripped everything.”
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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